This presentation contains forward-looking information within the meaning of applicable Canadian securities legislation, including management s

Transcription

1 August 9, 2016

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3 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, Ontario and Quebec, real estate market in Saskatchewan, economic impact of energy and resource sectors, transaction volumes, statements regarding the future financial position or results of ISC, customer growth and diversification, dividend expectations, creation of shareholder value, growth opportunities, development and completion of projects, impact of cost management efforts, capital and operating expectations, real gross domestic product, changes in high-value property registrations, changes in motor vehicle sales volume, steady 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 quarter ended June 30, 2016 as well as other documents filed by ISC with Canadian securities regulators through SEDAR at 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. 3

4 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) Saskatchewan s exclusive provider of key search and registry information services Provide customers with safe, secure services necessary to transact property, corporate and personal property searches and registrations Solid balance sheet and cash flow generation Acquisition of ESC Corporate Services Ltd. in October 2015 ~4.8% Dividend yield Ticker Symbol 4

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6 Information Services Corporation (ISC) is the exclusive provider of key search and registry information for the Government of Saskatchewan. Land Registry Corporate Registry Personal Property Registry Government and private businesses Law firms Municipalities Real estate agents Customers Surveyors Home builders +more 6

7 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. ISC is looking to build on its track record by translating its experience and success into new markets and products. 7

8 Full-service registry management Government ISC manages and delivers registry service operations. Government retains oversight, traditional public policy accountability and data ownership. Process customer requests Analyze, interpret and apply existing policy Maintain system integrity through record keeping and upgrades Initiate product development and planning Customer ISC acts as the customer interface either online, in person or by telephone. Ongoing customer support, training and consultation through customer forums and committees. 8

9 A wholly owned subsidiary of ISC 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 9

10 Governments, legal firms and financial institutions are looking to find cost savings and focus on their core business without compromising service quality. Improved workflows and automated processes help meet requirements and reduce potential business risk for clients. ISC has the know-how, processes, technology and proven experience to manage data authentication and security. 10

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 11

12 Individuals or businesses who directly benefit from ISC registries: Municipalities Real estate agents Home builders Insurance companies Car dealers Intermediaries who manage relationships with end users but are typically the beneficiary of our registries: Law firms Surveyors Engineers 12

13 Law firms Financial Institutions Legal Professionals 13

14 Transaction Service Revenue Type* Searches Registrations Maintenance and related services Online or in person Customized Online or in person Online or in person Customized Flat fees (standard searches, e.g. $11.00 per land title search) Value-based fees (0.3% of the value of the land title) Flat fees (other registries) Flat or negotiated fees * For a full list of our fees, go to 14

15 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 * For a full list of our fees, go to 15

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17 Total revenue for year ended December 31, (CAD$ millions) Land Titles Registry Personal Property Registry Corporate Registry Geomatics Land Surveys Directory Services 17

18 Consolidated EBITDA 1 and Consolidated Adjusted EBITDA 1 for the year ended December 31, (CAD$ millions) EBITDA Adjusted EBITDA EBITDA, 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,

19 $ 24.7M Total revenue 41.7% EBITDA margin $ 0.38 EPS (basic share) 19

20 thousands of CAD dollars; except earnings per share and where noted Revenue - Registries Three Months Ended June 30, 2016 Three Months Ended June 30, 2015 Six Months Ended June 30, 2016 Six Months Ended June 30, 2015 Land Registry $15,371 $15,299 $26,867 $27,002 Personal Property Registry 2,778 2,696 5,005 4,805 Corporate Registry 2,378 2,051 4,968 4,249 Total 20,527 20,046 36,840 36,056 Revenue - Services 3,618-6,895 Revenue - Other TOTAL Revenue $24,674 $20,053 $44,280 $36,065 Expenses $16,468 $13,112 $32,827 $26,682 EBITDA 1 10,282 8,248 15,359 12,011 EBITDA margin 1 (% of revenue) 41.7% 41.1% 34.7% 33.3% Adjusted EBITDA 1 $11,134 $8,411 $16,605 $12,191 Adjusted EBITDA margin % 41.9% 37.5% 33.8% Net income and total comprehensive income $6,578 $4,974 $8,774 $6,693 Earnings per share 2 (basic) $0.38 $0.28 $0.50 $0.38 Earnings per share, (diluted) 2 $0.37 $0.28 $0.49 $0.38 Free cash flow 1 $6,297 $6,642 $9,613 $8, 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 three and six months ended June 30, The calculation of earnings per share is based on net income after tax and the weighted average number of shares outstanding during the period. 20

21 In April, we subscribed for an additional 351,565 Class B Common shares in the capital of OneMove Technologies Inc. for a total of $215 thousand, representing our pro rata share of an equity raise by OneMove.* In June, ESC acquired the interest of a subcontractor in a services contract with a customer for approximately $2.7 million. In July, we successfully launched the new online application for the Corporate Registry system, providing a more convenient service to search, register and maintain corporate entities in Saskatchewan. On July 25, we announced the ratification of a new four-year collective agreement with SGEU ending September 30, * Effective July 1, 2016, OneMove Technologies Inc. amalgamated with its wholly owned subsidiary, Dye & Durham Corporation, changing its name to Dye & Durham Corporation. 21

22 Balance sheet remains strong with ability to fund growth opportunities Continues to support dividend Prudent use of balance sheet $35.2 M Amount of cash on hand as at June 30, 2016 $7.0 M Amount of 2016 dividends paid to shareholders* $5-6 M CapEx expected in 2016 $22.3 M Long-term debt as at June 30, 2016 *dividends paid as at June 30, 2016

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24 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 24

25 Continued focus on delivering stable, predictable returns Expected consolidated annual EBITDA margin between 32% and 34% Current economic conditions expected to continue to impact revenue in 2016 Expected CapEx of $5-$6 million 25

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27 Strong core business 20-year exclusive Master Service Agreement, including data licence Understands Alternative Services Delivery model and needs of governments Solid balance sheet Strong cash flow supporting continuation of dividend Room to lever further Start of execution on growth opportunities Investment in Dye & Durham Corporation Acquisition of ESC Corporate Services Ltd. 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 27

28 Shares outstanding Listing 17.5 million Class A Limited Voting Shares Market cap $ M 52-week high $ week low $13.21 Dividend $0.80 per share annually (paid quarterly) Contact investor.relations@isc.ca or call toll free: as at August 9,

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30 Top 5 Institutional Holders Institutional Shareholder % O/S Analyst Coverage Institution Analyst Cover initiated on Sentry Investments, Inc % QV Investors Inc. 6.89% Burgundy Asset Management Ltd. 3.93% RBC Steve Arthur, CFA August 7, 2013 GMP Securities Michael Urlocker, CFA February 3, 2014 CIBC Stephanie Price July 15, 2014 Mawer Investment Management Ltd. 2.49% Mackenzie Financial Corp. 1.45% Ownership Distribution 38% 31% Retail Investors Institutional Investors Government of Saskatchewan 31% as at July 29,

31 President and Chief Executive Officer Mr. Stusek was appointed President & CEO of ISC in He spent 13 years with the City of Regina, including three years as Director of Transit, prior to joining ISC in He holds an MBA from the University of Regina. 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. 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. 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. 31

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33 8.0% Agriculture, Forestry, Fishing & Hunting - 8.0% 20.4% Mining, Quarrying, and Oil & Gas Extraction % 44.9% Utilities - 2.6% Construction - 7.7% 7.7% 2.6% Manufacturing - 6.6% Real Estate, Renting & Leasing - 9.9% 9.9% 6.6% Other % 33