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NEXTED GROUP LIMITED — Investor Presentation 2014
Oct 19, 2014
65463_rns_2014-10-19_6da35013-5157-41c3-a28f-f5953c2c053b.pdf
Investor Presentation
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Acquisition of Dynamic Learning Services Pty Ltd Ross Cotton, Executive Director 20th October 2014
Disclaimer
This Presentation has been prepared by iCollege Limited (“Company”). The material contained in this Presentation has been prepared for information purposes only, and is not an offer, invitation or recommendation for subscription or purchase of securities in the Company
While the information contained in this Presentation has been prepared in good faith, neither the Company nor any of its shareholders, directors, officers, agents, employees or advisers give any representations or warranties (express or limited) as to the accuracy, reliability or completeness of the information in this Presentation, or of any other written or oral information made or to be made available to any interested party or its advisers (all such information being referred to as “Information”) and liability therefore is expressly disclaimed to the full extent permitted by law. Accordingly, to the full extent permitted by law, neither the Company nor any of its directors, officers, agents, employees or advisers take any responsibility for, or will accept any liability, whether direct or indirect, express or limited, contractual, tortious, statutory or otherwise, in respect of the accuracy or completeness of the Information or for any of the opinions contained in this Presentation or for any errors, omissions or misstatements or for any loss, howsoever arising, from the reliance on or use of this Presentation.
Neither the issue of this Presentation nor any part of its contents is to be taken in any form with any inaccuracies in, or omissions from, this Presentation which may become apparent.
The Company reserves its right to terminate any discussions or negotiations with any person.
In no circumstances will the Company be responsible for any costs, losses or expenses incurred in connection with any commitment on the part of a third party to proceed appraisal or investigation of the Company.
In furnishing this Presentation, the Company does not undertake or agree to any obligation to provide the recipient with access to any additional information or to update this Presentation or to correct any errors.
This Presentation should not be considered as the giving of investment advice by the Company or any of its shareholders, directors, officers, agents, employees or advisers. In particular, any estimates or projections or opinions contained in this Presentation necessarily involve significant elements of subjective judgment, analysis and assumptions and each recipient should satisfy itself in relation to such matters.
The Presentation contains reference to certain intentions, expectations and plans of the Company. These intentions, expectations and plans may or may not be achieved. They are based on certain assumptions which may not be met or on which views may differ. The performance and operations of the Company may be influenced by a number of factors, many of which are outside of its control. No representation or warranty, express or implied, is made by the Company or any of its respective directors, officers, employees, advisers or agents that any intentions, expectations or plans will be achieved either totally or partially or that any particular rate of return will be achieved.
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Summary
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iCollege Ltd (“iCollege”) has signed an agreement to acquire 100% of the issued capital in Dynamic Learning Services Pty Ltd (“DLS”)
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DLS is a NSW based accredited Registered Training Organisation (RTO) currently delivering education courses in Australia and overseas
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Courses offered are across a number of key sectors including Hospitality, Business Administration, Management, Real Estate, Aged Care, Retail, Process & Competitive Manufacturing and Finance
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DLS has a strong international footprint and has been successful in implementing education and training programs in a number of countries including :
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China, India, Sri Lanka, Malaysia, Vietnam, Australia & Russia
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Corporate clients include a number of leading brand names, across a wide range of industries:
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LJ Hooker, PRD Nationwide, St George Illawarra Dragons, Raine and Horne, Belle Property Group, McGrath Real Estate, Eastern Suburbs Rugby League Football Club and Anytime Fitness
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DLS has revenues of $2.98m for EBIT of $1m in FY14 (unaudited).
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Acquisition consideration of $4m (based on 4x FY14 EBIT) will be staged and include a mix of cash and iCollege shares
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Initial upfront acquisition payment of $1.5m cash represents 1.5x FY14 EBIT
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Remaining consideration of $2.5m is based on specific EBIT performance hurdles over the next 3 financial years payable in a combination of cash and shares
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Strategic Rationale
The DLS Acquisition is highly complementary and delivers on a number of iCollege’s key strategic objectives
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Significantly bolsters iCollege’s course offering
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Courses are offered across a wide range of key sectors
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Bolsters iCollege’s revenue sources and client base
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DLS has over 40 quality corporate clients
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Brings on board significant turnover and EBIT
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$2.98m Revenue and $1m EBIT for FY14
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Provides the springboard for iCollege’s expansion into the Asian market
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DLS is already delivering courses in Singapore, Vietnam, Malaysia and India
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Key partnerships are in place throughout the region
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Potential for significant revenue growth by utilising iCollege’s mobile optimised delivery platform - Courses will be offered via a blended delivery model
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Online delivery of appropriate courses will lead to both increased revenues and EBIT margins
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Financial Summary
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DLS had revenue of $2.98m in FY14 and $1m EBIT (unaudited)
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The upfront consideration of $1.5m cash represents 1.5x DLS’s FY14 EBIT
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Total acquisition of $4m represents 4x FY14 EBIT, on the following terms: - $1.5m cash on completion of DD
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On reaching FY15 forecast of $1.3m EBIT a further $500k cash
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On reaching EBIT of $1.8m in FY16 a payment of $500k cash and $500k ICT scrip
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On reaching EBIT of $2.2m in FY17 a further $500k cash and $500k ICT scrip
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Integration costs are expected to be minimal with iCollege’s proprietary technology already functional and ready to scale
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The cost synergies from operational consolidation, reduction in duplication data and compliance, the implementation of online delivery, and the combining of education programs are significant
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Integration
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iCollege will retain key DLS management to facilitate the integration and drive the future growth of the business
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DLS has a VET fee application in progress which will significantly increase revenue
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iCollege will deliver specific DLS courses 100% online via its platform which will reduce the reliance on faceDLS courses
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to-face training and therefore open up additional markets for
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Expansion into the Asian markets, specifically India and South East Asia will grow primarily via the delivery of content by iCollege’s mobile optimised technology and key DLS partnerships
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Integration of DLS is expected to occur over a 12 month timeframe
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iCollege Strategic Direction
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iCollege will focus on the acquisition of both accredited RTOs and non-accredited education providers whereby iCollege can implement and integrate its technology
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Reducing the reliance on face-to-face learning and associated overheads will lead to significantly improved EBIT margins
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Key sectors for growth will be Health Wellness, Aged Care, Finance, Management, Business, Fitness, Hospitality, Retail and Design
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Acquisitions will be sought at competitive EBIT multiples that provide significant private/public arbitrage scenarios for iCollege shareholders
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Key Market for growth will be South East Asia and India, with the DLS acquisition providing invaluable pathways into these markets
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Ross Cotton will join the board as Executive Director responsible for strategy, finance and investors relations
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Conclusion
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Dynamic Learning Services is a significant addition to iCollege and sets the company on a fresh course of growth via acquisition whereby iCollege’s technology can be leveraged
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Strengthens iCollege’s offering to students and the ability for the company to create fresh 100% accredited course content
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Strengthens positions in key geographies of Australia, Singapore, Malaysia and India
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Gives iCollege exposure to a suite of high quality corporate clients
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Most importantly, iCollege will have a solid revenue base, bolster its management team, increase its accredited footprint and potential access to VET funding
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For additional information
Please contact Ross Cotton, Executive Director +61 419 870 363 [email protected] Victor Hawkins, Managing Director [email protected]
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