Q2 14 results presentation final

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Q2 14 results presentation final

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  • 1. Second quarter 2014 financial results August 13th 2014 The Science of Finance
  • 2. 2 Forward-looking statements This presentation contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. All statements, other than statements of historical facts, included in this presentation that address activities, events or developments that Markit Ltd. (Markit or the Company) expects, believes or anticipates will or may occur in the future are forward-looking statements. Without limiting the generality of the foregoing, forward-looking statements contained in this presentation may include the expectations of management regarding plans, strategies, objectives and anticipated financial and operating results of the Company. Markits estimates and forward-looking statements are mainly based on its current expectations and estimates of future events and trends, which affect or may affect its businesses and operations. Although Markit believes that these estimates and forward-looking statements are based upon reasonable assumptions, they are subject to several risks and uncertainties and are made in light of information currently available to Markit. When used in this presentation, the words anticipate, believe, intend, expect, plan, will or other similar words are intended to identify forward-looking statements. Such statements are subject to a number of assumptions, risks and uncertainties, many of which are beyond the control of Markit, which may cause actual results to differ materially from those implied or expressed by the forward-looking statements. Further information on such assumptions, risks and uncertainties is available in Markits filings with the United States Securities and Exchange Commission (SEC). Markits SEC filings are available at www.sec.gov or on the investor relations section of its website, www.markit.com. Markit undertakes no obligation and does not intend to update these forward-looking statements to reflect events or circumstances occurring after the date of this presentation. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this press release. All forward-looking statements are qualified in their entirety by this cautionary statement. Non-IFRS financial measures This presentation also includes measures defined by the SEC as non-IFRS financial measures. Markit believes that these non-IFRS measures can provide useful supplemental information to securities analysts, investors and other interested parties regarding financial and business trends relating to its financial condition and results of operations when read in conjunction with the companys reported results. Definitions and reconciliations of these non-IFRS measures to most directly comparable IFRS financial measures are available in the Appendix of this presentation and in Markits earnings release dated August 13, 2014. Copyright 2014, Markit Group Limited. All rights reserved and all intellectual property rights are retained by Markit. Important notice
  • 3. 3 Business overview Lance Uggla, CEO Second quarter and first half 2014 financial results Jeff Gooch, CFO Appendix Agenda
  • 4. Q2 and H1 2014 financial results Jeff Gooch, CFO
  • 5. 5 Solid second quarter performance Q2 2014 financial results overview Revenue increased 11.0% to a quarterly record of $264.6 million Driven by topline growth in all three business segments: Information +5.7% Processing +1.7% Solutions +35.7% Constant currency revenue growth +7.1% (4.3% organic, 2.8% acquired) Recurring revenue of 94.7%; recurring fixed revenue increased to 50.8% of total revenue Renewal rate remained at circa 90.0% Continued profitability and strong margins maintained Adjusted EBITDA grew 7.7%; Adjusted EBITDA margin of 45.4% Adjusted Earnings were $68.3 million and Adjusted EPS diluted were $0.37 Adjusted EBITDA is defined as profit for the period from continuing operations before income taxes, net finance costs, depreciation and amortisation on fixed assets and intangible assets (including acquisition related intangible assets), acquisition related items, exceptional items, share-based compensation and net other gains or losses and excluding Adjusted EBITDA attributable to non-controlling interests. Adjusted EBITDA margin is defined as Adjusted EBITDA divided by revenue, excluding revenue attributable to non-controlling interests. Adjusted Earnings is defined as profit for the period from continuing operations before amortisation of acquired intangibles, acquisition related items, exceptional items, share-based compensation, net other gains or losses and unwind of discount, less the tax effect of these adjustments and excluding Adjusted Earnings attributable to non-controlling interests. Adjusted EPS diluted is defined as Adjusted Earnings divided by the weighted average number of shares issued and outstanding, diluted.
  • 6. 6 Revenue growth Q2 2013 versus Q2 2014 ($ million) Q2 2014 financial results $238.3 $10.3 $6.8 $9.2 $264.6 $200 $210 $220 $230 $240 $250 $260 $270 Q2 2013 revenue Organic growth Acquired growth FX / Currency impact Q2 2014 revenue +4.3% +2.8% +3.9% +11.0%
  • 7. 7 Summary financial results ($ million) Q2 and H1 2014 financial results Q2 2014 Q2 2013 YoY% H1 2014 H1 2013 YoY% Revenue 264.6 238.3 11.0% 524.0 465.7 12.5% Adjusted EBITDA (1) 120.0 111.4 7.7% 236.7 202.2 17.1% Adjusted EBITDA margin (2) 45.4% 46.7% n/a 45.2% 45.8% n/a Adjusted Earnings (3) 68.3 70.8 (3.5)% 141.2 118.3 19.4% Adjusted EPS diluted (4) $0.37 $0.41 (9.8)% $0.78 $0.68 14.7% 1. Adjusted EBITDA is defined as profit for the period from continuing operations before income taxes, net finance costs, depreciation and amortisation on fixed assets and intangible assets (including acquisition related intangible assets), acquisition related items, exceptional items, share-based compensation and net other gains or losses and excluding Adjusted EBITDA attributable to non-controlling interests. 2. Adjusted EBITDA margin is defined as Adjusted EBITDA divided by revenue, excluding revenue attributable to non-controlling interests. 3. Adjusted Earnings is defined as profit for the period from continuing operations before amortisation of acquired intangibles, acquisition related items, exceptional items, share- based compensation, net other gains or losses and unwind of discount, less the tax effect of these adjustments and excluding Adjusted Earnings attributable to non-controlling interests. 4. Adjusted EPS diluted is defined as Adjusted Earnings divided by the weighted average number of shares issued and outstanding, diluted.
  • 8. 8 Revenue mix (Q2 2014) ($ million) Q2 and H1 2014 financial results Q2 2014 Q2 2013 YoY% H1 2014 H1 2013 YoY% Recurring fixed 50.8% 49.9% 0.9% 51.3% 50.2% 1.1% Recurring variable 43.9% 46.3% (2.4)% 43.6% 45.9% (2.3)% Non-recurring 5.3% 3.8% 1.5% 5.1% 3.9% 1.2% Key Q2 features: Recurring fixed revenue % increased yoy (+$15.7 million) due to new business wins and moving customers from variable to fixed contracts Recurring variable revenue increased yoy (+$5.6 million) due to strength in the loans market and the acquisition of Markit Corporate Actions, whilst decreasing as % of total revenue Non-recurring revenue increased yoy (+$4.9 million) driven by new business wins in Solutions 50.8% 43.9% 5.3% Recurring fixed Recurring variable Non-recurring $134.5 $116.0 $14.1
  • 9. 9 Operating expenses ($ million) Q2 and H1 2014 financial results Q2 2014 Q2 2013 YoY% H1 2014 H1 2013 YoY% Personnel costs (89.3) (77.6) 15.1% (178.4) (153.6) 16.1% Non personnel costs (55.3) (49.3) 12.2% (108.9) (98.4) 10.7% Total operating expenses (144.6) (126.9) 13.9% (287.3) (252.0) 14.0% Key features: Personnel costs increased due to acquisitions (Markit Corporate Actions and thinkFolio), new hires, increase in cash compensation and FX Headcount growth was predominantly in low cost locations Non personnel costs increase largely driven by acquisition of Markit Corporate Actions and thinkFolio Technology costs closely controlled
  • 10. 10 Exceptional items ($ million) Q2 and H1 2014 financial results Q2 2014 Q2 2013 H1 2014 H1 2013 Legal advisory costs (1.8) (1.1) (2.9) (2.2) Profit on sale of available-for-sale financial asset - - - 4.2 IPO preparation and execution costs (8.4) - (12.1) - Accelerated IFRS 2 charges (1.0) - (7.3) - Recognition of liability for social security costs on option exercise (20.1) - (20.1) - Total exceptional items (31.3) (1.1) (42.4) 2.0