March 15, 2016 - Proactiveinvestors UK€¦ · Many factors and risks could cause our actual...

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March 15, 2016

Transcript of March 15, 2016 - Proactiveinvestors UK€¦ · Many factors and risks could cause our actual...

Page 1: March 15, 2016 - Proactiveinvestors UK€¦ · Many factors and risks could cause our actual results to differ materially from those expressed or implied by forward-looking information

March 15, 2016

Page 2: March 15, 2016 - Proactiveinvestors UK€¦ · Many factors and risks could cause our actual results to differ materially from those expressed or implied by forward-looking information

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Page 3: March 15, 2016 - Proactiveinvestors UK€¦ · Many factors and risks could cause our actual results to differ materially from those expressed or implied by forward-looking information

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

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• 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

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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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TSX: ISV 11

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

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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

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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

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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

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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

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$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

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$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

TSX: ISV

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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)