Full year results – 30 June 2015GBST Holdings Limited (ASX: GBT)

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Introduction

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F L A G S H I P P R O D U C T S

F O R

client accounting and

securities transaction processing

C U S T O M E R S I N

Australia, Asia, Europe,

North America

F L A G S H I P P R O D U C T

F O R

wealth administration and

registry

C U S T O M E R S I N

Australia, Asia, New Zealand,

United Kingdom

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GBST FY2015 – Highlights

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CONTINUED STRONG INTERNATIONAL GROWTH

Revenue up 16% to

$114.3 million

EBITDA up 20% to

$24.5 million

NPAT up 52% to

$15.3 million

Cash NPAT up 35%

to $19.2 million

Operating margin

in line at 21%

EPS up 52%

to 22.9 cps

Cash EPS up 35%

to 28.9 cps

Final dividend up 22%,

to 5.5 cps; full year

dividends of 10.5 cpsFor

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FY2015 - Financial Performance

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• Strong revenue growth

• Record EBITDA

• Full provision made of $640,000 for bad

debt from BBY administration

• Debt free from August 2014

• Investment amortisation charges declining

• R&D related tax concessions - low tax rate

• Strong NPAT and cash NPAT growth

• Strong EPS and cash EPS growth

Results for the year ended: 30-Jun-15

$m

30-Jun-14

$m

%

Change

Revenue 114.3 98.5 16%

EBITDA 24.5 20.2 21%

EBITDA % Margin 21% 21%

Unallocated 0.0 0.3

EBITDA 24.5 20.5 20%

Finance income / (expense) (0.0) (1.1) 100%

Depreciation & operating amortisation (3.2) (3.1) (3%)

Investment amortisation (4.0) (4.3) 7%

PBT 17.3 12.0 44%

Income tax expense (2.1) (1.9)

Effective tax rate 12% 16%

NPAT 15.3 10.0 52%

Adjusted Cash NPAT 19.2 14.3 35%

EPS (cps) 22.9 15.1 52%

Cash EPS (cps) 28.9 21.5 35%For

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GBST FY2015 – Key Points

• GBST Composer sales growth

supported by recurring revenue and

technology migration projects from

major financial institutions

• Solid capital markets revenue in an

increasingly competitive market

• Significant investment to develop

GBST Syn~ regional solution

• Strong UK GBST Composer

revenue growth driven by ongoing

legislation change

• Substantial increase in higher

margin services work

• Continuing investment to increase

product scale and capability

• Capital markets environment

remains constrained

• Increased international GBST Syn~

revenue; investment required to

support growth

• Global rollout for major international

bank continuing

• Ongoing recurring licence fee

revenue and higher sponsored work

• Technology development centre

continues to contribute to

development of GBST products

• Successful first phase of GBST

Syn~ implementation completed for

cornerstone client

• Preparations for second phase of

development under way

• Strengthened leadership, sales and

product strategy team to drive

business growth

• Further investment required to

support growth

A U S T R A L I A E U R O P E

A S I A U S A

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• Record revenue $114.3 million, up 16%

from FY2014; more than 10% p.a.

average revenue growth in past four

years

• Growing client base internationally

includes some of the world’s leading

financial services companies

• Licence fees include high-quality recurring

annuity income based on long term client

contracts with fixed and variable (activity-

based) components

• Increased services revenue reflects

higher number and size of client

installations

• Strong licence fee and services revenue

growth

Group Revenue

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Group Revenue Analysis

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• International revenue now 55%, up from

48% in FY2014; confirms success of

growth strategy as international sales

surpass Australian sales for first full year

• Australian revenues were steady as difficult

trading conditions continued

• Strong UK Wealth Management revenue

grew as new clients’ projects continued,

supported by greater ongoing activity

• Capital Markets continued to expand

internationally; Asian revenue increased

• International revenue is denominated

mostly in £ Sterling and US$; lower AU$

favours GBST

• Financial Services division revenue for

FY2015 and prior years is included in

Capital Markets revenueFor

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EBITDA

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• Record EBITDA driven by strong Wealth

Management earnings in UK; steady

performance in Australia

• Capital Markets Australian earnings

impacted by one-off debtor impairment

from BBY administration; includes nil

contribution from former Financial Services

division ($1.1 million loss in FY2014)

• Investment to build international scale

continues; GBST’s international capital

markets business’ loss reflects ongoing

product development and investment in

new markets

• Investment in R&D consistent with prior

years; all GBST R&D investment is

expensed as incurred

• Capex as a proportion of EBITDA reduced

from 18% in FY14 to 15%; 5-year average

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EPS and Dividend

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• Earnings per share (EPS) improved to 22.9

cents, up 52% from FY2014

• Record Cash EPS 28.9 cents per share

• Final dividend declared 5.5 cents per

share; dividends for the full year 10.5

cents, up 24% from FY2014

• All dividends are fully franked

• Dividend payout ratio 36% of Cash NPAT

• Record date for entitlement is

30 September 2015

• Payment date is 14 October 2015

• Franking credit balance $16.8 million, up

$2 million (30 June 2014: $14.8 million)For

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Financial Position

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• Cash $7.8 million at 30 June 2015

• Intangible assets primarily comprise

purchased software and client contracts

(expensed over 5-10 years); and goodwill

(not amortised)

• Carrying value of intangible assets

comprises InfoComp ($31.5 million),

Coexis ($14.7 million), and other

intangibles ($7.1 million)

• Senior debt fully repaid, down from $5

million at 30 June 2014

• Unearned income of $10.1 million

represents advance payments from

clients for licences and services; the

balance varies due to timing of payments

Financial position as at 30-Jun-15

$m

30-Jun-14

$m

ASSETS

Cash 7.8 2.3

Other current assets 23.8 18.3

Intangible assets 54.3 56.5

Other non-current assets 14.6 13.8

TOTAL ASSETS 100.5 91.0

LIABILITIES

Loans and borrowings - current 0.2 0.7

Unearned income 10.4 11.1

Other current liabilities 16.1 13.1

Loans and borrowings - non current 0.1 5.3

Other non-current liabilities 7.2 7.5

TOTAL LIABILITIES 34.0 37.7

NET ASSETS 66.5 53.3

EQUITY

Issued capital 37.7 37.7

Reserves 1.9 (2.4)

Retained earnings 26.9 18.0

TOTAL EQUITY 66.5 53.3

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Cash Flow

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• Cash flow from operations (excluding

interest and taxes) of $25.5 million

• 104% conversion of EBITDA to cash flow

• Strong cash flow from annuity income

• Intangibles purchases relate to third party

software acquired for use within the

business

• No internal development costs are

capitalised

• Cash flows are managed in local

currencies where possible to limit

exposure to foreign currency conversion

Results for the year ended: 30-Jun-15

$m

30-Jun-14

$m

CASH FLOWS FROM OPERATIONS

Receipts 123.0 106.3

Payments (97.6) (85.5)

Finance costs (0.1) (0.9)

Income tax (4.9) (4.4)

Net cash provided from operations 20.4 15.6

CASH FLOWS FROM INVESTMENTS

Purchase of tangible assets (2.9) (1.9)

Purchase of intangible assets (0.7) (1.5)

Deferred consideration received 0.0 1.5

Net cash used in investments (3.6) (1.9)

CASH FLOWS FROM FINANCING

Repayment of finance leases (0.7) (1.0)

Repayment of borrowings (5.0) (9.0)

Dividends paid (6.3) (5.0)

Net cash used in financing (12.0) (15.0)

NET INCREASE/(DECREASE) IN CASH 4.8 (1.3)

Effect of exchange rate fluctuations on cash held 0.6 0.1

Opening cash 1 July 2.3 3.5

CLOSING CASH 7.8 2.3

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GBST Wealth Management – Financial Performance

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30-Jun-15$m

30-Jun-14$m

% Change

Revenue - Australia 19.0 18.2 4%

Revenue - International 50.1 35.6 41%

Revenue - Total 69.1 53.8 28%

EBITDA - Australia 7.4 6.9 6%

EBITDA - International 11.4 6.6 74%

EBITDA - Total 18.8 13.5 39%

Solid revenue, performance in Australia

Strong UK revenue and market share growth

Higher margins in FY2015 reflect increased licence

revenue and scale benefits

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GBST Wealth Management – Highlights

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• Completed compliance with

Client Asset Source Book (CASS),

Pensions Freedom, and

FoFA/Superstream

E N D O R S E M E N T S R E G U L AT I O N

P R O D U C T SM A R K E T S

C L I E N T S

• AI 2015 Business Awards

- financial services

software supplier

of the year

• Licence revenue 35%

of international income

• UK wraps and

platforms market

expected to quadruple

by 2020

• Total assets managed

in the UK estimated at

£6 trillion and growing

• Currently developing

offshore platform to

service Asia with

existing client; GBST’s

Australian and UK

capability is highly

regarded

• Market share continued to expand;

GBST now has 10 UK and more than

30 Australia/New Zealand clients

• GBST composer supports three of

the top six UK wraps and platforms

and five of the leading pensions

providers

• Introduced multiple database

support with Microsoft SQL – a

significant step toward

internationalisation

• Added capability for UK annuities,

guaranteed pensions products,

dealing desks and Crest settlement

• Integration to Superstream

assisting rollover and contribution

processes and insurance

S I G N I F I C A N T

L O N G - T E R M

O P P O R T U N I T Y

M A R K E T L E A D I N G

P O S I T I O N

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GBST Wealth Management – Outlook

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• The 2012 UK Retail Distribution Review initiated once in a generation change to make retail

investment markets work better for consumers; further significant regulatory and policy changes

will include pension reforms and changes to Individual Savings Accounts (ISAs)

• Pensions Freedom legislation introduced 6 April 2015 in the UK allows people over 55 to draw

from their defined contribution benefits fund, a fundamental change; firms are moving to build

new distribution channels for higher wealth, higher margin customers

• Timely delivery of Pensions Freedom changes helped secure new GBST Composer clients;

integrated digital distribution capability ensures a strong pipeline of potential new business

• Support for annuity products is an industry first, opening markets for GBST Composer

• Development of GBST Composer as an international platform continues; current focus on the

Asian market, interest in wealth management growing

• GBST Composer’s unique multiple database capability supports commitment to delivering

technological innovation

• GBST Composer will receive significant investment to increase scale and extend capabilities to

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GBST Capital Markets – Financial Performance

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30-Jun-15$m

30-Jun-14$m

% Change

Revenue - Australia 32.3 32.6 (1)%

Revenue - International 12.4 11.7 6%

Revenue - Total 44.7 44.3 1%

EBITDA - Australia 9.0 9.2 (2)%

EBITDA - International (3.3) (2.5) (33)%

EBITDA - Total 5.7 6.7 (16)%

Steady performance in

Australia despite

increasingly competitive

market

Approximately 80% of

Australian revenue from

annuity licence fees and

long-term contracts

International revenue

increased; loss reflects

product investment and new

market entry costs

Licence based income

and long-term contracts

72% of total

Former GBST Financial Services division (FSD) now included in GBST Capital Markets division. FSD revenue was $2.9 million and EBITDA $0.0 million in FY2015.

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GBST Capital Markets – Highlights

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• GBST Shares and GBST Syn~ already

equipped to manage change to T+2 trading

in Australia and internationally

N O R T H AM E R I C A R E G U L AT I O N

P R O D U C T SM A R K E T S

C L I E N T S

• World's largest capital market

• Using GBST Syn~, cornerstone US client

increased commission assignment

automation from 30% to 98%

• Strengthened US team;

senior staff appointments

include US CEO

• GBST Shares and

GBST Syn~ support more

than 60 ASX participants

• Services revenue

exceeded 50% of

international sales, reflecting

new implementation work for

GBST Syn~

• As clients go ‘live’, recurring

annual license fees apply

• Enhanced GBST BIR business

intelligence capability for cross-

product reporting

• Ongoing development of GBST’s

powerful, data-driven risk

management analytics for equities

and derivatives

• GBST’s business model is based on

recurring revenue from software rental

L E A D I N G

A U S T R A L I A N

P R O D U C T S

S T R O N G

I N T E R N A T I O N A L

O P P O R T U N I T Y

The former Financial Services division has been integrated into the

Capital Markets division and will no longer be reported on separately

• GBST Syn~ now provides full

integration and settlement with

Singapore Exchange (SGX);

three clients using GBST’s services

• GBST Syn~ now supports

Japanese market trade allocations

with more work planned.

• Asian work increased despite delays in

project starts; includes provision of middle

office services to broker-dealers and

outsourced back office services for custodians

• GBST Syn~ rollout for major international bank continuesFor

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GBST Capital Markets – Outlook

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• Landmark project to transition a global institutional bank back- and middle-offices from GBST

Shares to GBST Syn~ is continuing

• While new participants have entered the Australian market, this is expected to lead to new

opportunities for GBST and its industry-leading products

• Development continues to extend GBST Syn~’s new-generation services to enable clients’

expansion into new market segments, regions and asset classes including fixed income

• GBST has a strong and significant pipeline of potential new business, particularly in Asia, Japan

and the US, and is investing in its technology, sales and marketing expertise; while projects have

long lead times, there is a substantial market opportunity

• The US market for securities processing is the largest in the world with many broker dealers still

using older technologies; while GBST’s costs are expected to increase ahead of sales, the

opportunities for growth are very significant

• GBST has partnered with SAP HANA to roll out its Financial Transaction Tax (FTT) product in

Europe; this is expected to assist sales once FTT activation dates across EU member countries

are agreed

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• GBST’s strategy for global growth continues; in FY2015 international sales rose from

48% to 55% of total sales and this proportion is increasing

• Legislative change in the wealth management industry continues to be a driver of

GBST’s business

• Increasing regulatory and compliance costs in capital markets, such as changes to T+2

settlement, are likely to underpin sales growth

• GBST is actively pursuing new business opportunities in all regions and has a strong

international pipeline in both wealth management and capital markets

• Investment in product development and GBST’s sales network is accelerating as the

company seeks to expand into new markets; technology development centre is

increasingly contributing to product development

• Strong balance sheet and cash flow; potential for both organic growth and acquisition

• Final dividend 5.5 cents; dividends for the year up 24% to 10.5 cents for the year

Summary

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Disclaimer

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While every effort has been made to provide accurate and correct information in this presentation, GBST Holdings

Limited does not warrant or represent that the information is free from errors or omissions. To the extent permitted by

law, no responsibility for any loss, damage, cost or expense arising in any way from anyone acting or refraining from

acting as a result of information in this presentation is accepted by GBST Holdings Limited. This presentation is not

investment advice that can be relied upon as it has not been prepared considering any individual’s objectives, financial

position or needs.

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