March 15, 2016 - Proactiveinvestors UK€¦ · Many factors and risks could cause our actual...
Transcript of March 15, 2016 - Proactiveinvestors UK€¦ · Many factors and risks could cause our actual...
March 15, 2016
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This presentation contains forward-looking information within the meaning of applicable Canadian securities legislation, including
management’s expectations and certain assumptions with respect to the registry services and products, its competitive landscape,
economic conditions in Canada and in particular, Saskatchewan,, real estate market in Saskatchewan, impact of prices for agricultural
commodities, oil and potash, transaction volumes, statements regarding the future financial position or results of ISC, customer growth
and diversification, investment in human capital, dividend expectations, creation of shareholder value, growth opportunities, capital and
operating expectations, real gross domestic product, changes in high value property registrations, changes in motor vehicle sales
volume, slowed growth of active business entities, consolidated EBITDA margin, income taxes, our ability to attract and retain skilled
staff, the compensation and benefits that will be paid or provided to employees and our level of customer service, as well as goodwill
and intangibles are material factors in preparing forward-looking statements. In addition, the words ‘‘may’’, ‘‘will’’, ‘‘would’’, ‘‘should’’,
‘‘could’’, ‘‘expect’’, ‘‘plan’’, ‘‘intend’’, ‘‘trend’’, ‘‘indicate’’, ‘‘anticipate’’, ‘‘believe’’, ‘‘estimate’’, ‘‘predict’’, ‘‘project’’, ‘‘targets’’, ‘‘strive’’,
‘‘strategy’’, ‘‘continue’’, ‘‘likely’’ or ‘‘potential’’ or the negative or other variations of these words or other comparable words or phrases
are intended to identify forward-looking statements. Forward-looking information involves known and unknown risks, uncertainties and
other factors that may cause actual results or events to differ materially from those expressed or implied by such forward-looking
information. Although ISC believes the forward-looking information contained in this release is based upon reasonable assumptions,
readers are cautioned not to place undue reliance on forward-looking information as it is inherently uncertain and no assurance can be
given that the expectations reflected in such information will prove to be correct. Many factors and risks could cause our actual results to
differ materially from those expressed or implied by forward-looking information including those detailed in ISC’s Annual Information
Form, dated March 15, 2016, ISC’s Consolidated Financial Statements and Notes and Management’s Discussion and Analysis for the
year ended December 31, 2015 as well as other documents filed by ISC with Canadian securities regulators through SEDAR at
www.sedar.com from time to time. Investors and others should carefully consider the above-noted factors and risks and other
uncertainties and potential events. The forward-looking information in this release is made as of the date hereof and, except as required
under applicable securities legislation, ISC assumes no obligation to update or revise such information to reflect new events or
circumstances.
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Transformed from Crown corporation
to publicly traded business corporation in July 2013 to provide
a better business model for the Government of Saskatchewan
and customers (Government retained 31% shareholding)
Provide customers with safe, secure services
necessary to transact property, corporate and
personal property searches and registrations
Solid balance sheet and
cash flow generation
~5.8% Dividend yield
Ticker Symbol TSX: ISV
Acquisition of
ESC Corporate
Services Ltd. in
October 2015
Saskatchewan’s exclusive
provider of key search and
registry information services
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+more
Information Services Corporation (ISC) is the exclusive
provider of key search and registry information for the
Government of Saskatchewan.
Real estate agents
Municipalities
Law firms
Government and
private businesses
Land
Registry
Corporate
Registry
Personal Property
Registry
Home builders
Surveyors
Customers
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Governments look for opportunities to offer products and services
through the private sector when the cost is reasonable.
It allows governments to focus on their priority areas and shift costs
of maintaining and upgrading technology to the private sector.
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ISC is looking to build on its track record by translating its
experience and success into new markets and products. TSX: ISV
• ISC manages and delivers registry
service operations.
• Government retains oversight,
traditional public policy
accountability and data ownership.
• ISC acts as the customer interface
either online, in person or by telephone.
• Ongoing customer support, training and
consultation through customer forums
and committees.
Process customer requests
Analyze, interpret and apply
existing policy
Maintain system integrity
through record keeping and
upgrades
Initiate product development
and planning
Full-service registry management
Government Customer
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A wholly owned subsidiary of ISC
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ESC is a diversified supplier of corporate
services in Ontario and Quebec:
• Customers: Financial services
institutions, law firms, corporations
• Services: searches and
registrations, Know-Your-Customer
services, corporate supplies and
accessories
Governments, legal firms and financial institutions are looking to find cost savings
and focus on their core business without compromising service quality.
ISC has the know-how, processes, technology and proven experience to manage
data authentication and security.
Improved workflows and automated processes help meet
requirements and reduce potential business risk for clients.
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We operate in two reportable segments defined by their
primary type of service offering.
• Land Registry (includes Land
Titles Registry, Land Surveys
Directory and Geomatics)
• Personal Property Registry
• Corporate Registry
• Common Business Identifier
and Business Registrations
Saskatchewan
• Saskatchewan Asbestos
Registry
• ESC - Search and Registration
Services
• ESC - "Know-Your-Customer"
Services
• ESC - Corporate Supplies and
Accessories
Municipalities Real estate
agents
Home builders Insurance
companies
Car dealers
Individuals or businesses who directly benefit from ISC registries:
Intermediaries who manage relationships
with end users but are typically the beneficiary of
our registries:
Law firms Surveyors Engineers
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Financial
Institutions
Law firms
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Legal
Professionals
Transaction Service Revenue Type*
Searches Online or in person
Customized
Flat fees
(standard searches, e.g. $10.82
per land title search)
Registrations Online or in person
Value-based fees
(0.3% of the value of the land title)
Flat fees (other registries)
Maintenance and
related services
Online or in person
Customized Flat or negotiated fees
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* For a full list of our fees, go to www.isc.ca
Transaction Service Revenue Type*
Search and registration Online or in person Flat fees
Know-Your-Customer In person Flat fees
Corporate supplies and
accessories
Online or in person
Customized Per unit fees
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* For a full list of our fees, go to www.eservicecorp.ca/index.php/pricing-turnaround-times
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2013 2014 2015
Total revenue for year ended December 31, (CAD$ millions)
Land Titles Registry Personal Property Registry Corporate Registry Geomatics Land Surveys Directory Services
1EBITDA, EBITDA margin, adjusted EBITDA, adjusted EBITDA margin and free cash flow are not recognized as measures under IFRS and do not
have a standardized meaning prescribed by IFRS and therefore, are not comparable to similar measures by other corporations. See section name
“Non-IFRS Measures” in the Management’s Discussion & Analysis for the period ended December 31, 2015.
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2013 2014 2015
Consolidated EBITDA1 and Consolidated Adjusted EBITDA1
for the year ended December 31, (CAD$ millions)
EBITDA Adjusted EBITDA
$22.6 M Total revenue
36.3 % EBITDA margin
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65% 11%
9%
14%
1%
Land Registry
Personal Property Registry
Corporate Registry
Services
Other
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1. EBITDA, EBITDA margin, adjusted EBITDA, adjusted EBITDA margin and free cash flow are not recognized as a measure under IFRS and do not have a standardized meaning prescribed by
IFRS. See section name “Non-IFRS Measures” in Management’s Discussion & Analysis for the year ended December 31, 2015.
2. The calculation of earnings per share is based on net income after tax and the weighted average number of shares outstanding during the period.
TSX: ISV
(thousands of CAD dollars;
except earnings per share and
where noted)
Three Months
Ended
December 31,
2015
Three Months
Ended
December 31,
2014
Year Ended
December 31,
2015
Year Ended
December 31,
2014
Revenue - Registries
Land Registry $14,816 $15,054 $ 56,871 $61,999
Personal Property Registry 2,407 2,338 9,981 9,870
Corporate Registry 2,038 2,017 8,133 8,235
Total 19,261 19,409 74,985 80,104
Revenue - Services 3,166 - 3,166 -
Revenue - Other 152 350 167 355
TOTAL Revenue $22,579 $19,759 $78,318 $80,459
EBITDA1 $ 8,188 $ 7,035 $28,363 $30,240
EBITDA margin1 (% of revenue) 36.3% 35.6% 36.2% 37.6%
Adjusted EBITDA1 $ 8,625 $ 7,057 $30,386 $31,579
Adjusted EBITDA margin1 38.2% 35.7% 38.8% 39.2%
Net income and total comprehensive income $ 4,567 $ 4,014 $15,917 $18,360
Earnings per share2 (basic) $ 0.26 $ 0.23 $ 0.91 $ 1.05
Free cash flow1 $ 6,689 $ 5,866 $21,489 $23,914
Expenses $16,219 $14,116 $55,730 $55,308
$36.6 M Amount of cash on hand
as at Dec. 31, 2015
$14.0 M Amount of 2015 dividends paid to
shareholders*
$5 - 6 M CapEx expected in 2016
$24.56 M Long-term debt as at Dec 31, 2015
Balance sheet remains strong
with ability to fund growth
opportunities
Prudent use of
balance sheet
Continues to
support dividend
*dividends paid as at Dec. 31, 2015
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Grow bottom line by:
• Effective planning
• Cost management
• Increased productivity
• Extend current services to other Canadian
jurisdictions and private industries
• Add new services or features to expand
business from existing clients
• Acquire smaller, value-added companies
that operate in our industry space
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Continued focus on delivering stable,
predictable returns
Current economic conditions
expected to continue to impact revenue
in 2016
Expected consolidated annual
EBITDA margin between 32% and 34%
Expected CapEx of $5-$6 million
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Strong core business
• 20-year exclusive Master
Service Agreement, including
data licence
• Understands Alternative
Services Delivery model and
needs of governments
Capacity to support
growth
• Outsourcing of business
process and services
• Will use private sector advantage to
access capital and the ability to leverage
economies of scale
Start of execution on growth
opportunities
• Investment in OneMove
Technologies Inc.
• Acquisition of ESC
Corporate Services Ltd.
Solid balance sheet
• Strong cash flow
supporting continuation
of dividend
• Room to lever further
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Shares
outstanding 17.5 million Class A Limited Voting Shares
Listing TSX: ISV
Market cap $242.38 M
52-week high $17.51
52-week low $13.21
Dividend $0.80 per share annually (paid quarterly)
Contact [email protected] or call toll free: 1 855 341 8363
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as at March 15, 2016
TSX: ISV
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Institutional Shareholder % O/S
Sentry Investments, Inc. 14.90%
QV Investors Inc. 10.07%
Burgundy Asset Management Ltd. 3.93%
Mawer Investment Management Ltd. 2.53%
Aston Hill Asset Management, Inc. 1.76%
Top 5 Institutional Holders
Institution Analyst Cover initiated on
RBC Steve Arthur, CFA August 7, 2013
GMP
Securities
Michael Urlocker,
CFA
February 3, 2014
CIBC Stephanie Price July 15, 2014
Analyst Coverage
36%
31%
34%
Ownership Distribution
Retail Investors
Institutional Investors
Government of
Saskatchewan
as at March 2, 2016
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Jeff Stusek – President and Chief Executive Officer
Mr. Stusek was appointed President & CEO of ISC in 2008. He spent 13 years with the City of Regina, including three years as Director of Transit, prior to joining ISC in 2006. He holds an MBA from the University of Regina.
Kathy Hillman-Weir, Q.C. – VP Corporate Affairs & General Counsel, Chief Privacy Officer
Mrs. Hillman-Weir is responsible for leading the company strategy and stakeholder relations, investor
relations, compliance and legal functions. She joined ISC in 2000 and previously held positions in the
Saskatchewan Ministry of Justice.
Shawn B. Peters – VP Finance & Technology and Chief Financial Officer
Before joining ISC in 2012, Mr. Peters held positions at Group Medical Services, Crown Investments Corporation of Saskatchewan and Ernst & Young.
Kenneth W. Budzak – VP Operations & Customer Experience
Before joining ISC in 2001, Mr. Budzak spent 15 years of senior leadership with the Saskatchewan Wheat Pool. He holds a Bachelor of Science in Agricultural Economics from the University of Saskatchewan.
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Bradley S.
Sylvester
Anthony Robert Guglielmin
Joel Douglas Teal, Board Chair
Jess Huan Chua
Douglas Allen Emsley
Dion E. Tchorzewski
William Scott Musgrave
Michelle Ouellette, Q.C.
Tom Christiansen
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TSX: ISV
6%
7%
15%
2%
8%
7%
9%
46%
Saskatchewan industry diversification based on GDP $ (2014)
Agriculture, forestry, fishing & hunting
Mining and quarrying
Oil and gas extraction
Utilities
Construction
Manufacturing
Real estate, renting & leasing
Other
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2013 2014 2015
Land Titles Registry Transaction Volume for the year ended December 31, (Number of transactions)