RUN Corp Limited FY 2012 Results Highlights 30 August 2012

Transcription

1 RUN Corp Limited FY 2012 Results Highlights 30 August 2012 To be read in conjunction with Appendix 4E and ASX release

2 RUN Corp Group FY 2012 has been a transformational year for the RUN Corp business RUN Corp Limited RUN Property Pty Ltd Australia s largest independent metropolitan Real Estate Agency In excess of $10B of real estate assets under management Agentplus Pty Ltd Providing technology, transaction processing and trust accounting services to the Real Estate industry Manages approximately $500M of tenant payments annually

3 FY2012 Highlights FY 2012 has been a transformational year for the RUN Corp business Debt Reduction Net debt reduced by $17M for the period from $34M to $17M Expect to further reduce debt via operating cash generation, with net debt expected to be approximately $12M by June 2013, assuming REX/HAL deal does not complete Debt secured against rent roll valued in excess of $60M Profit Improvement EBITDA of $19.7M, including $15M refinancing gain EBITDA less refinance gain, 18% higher than previous year PBT improved by $4.7M, excluding refinancing gain Cashflow from operations improved by $2.3M Continued Innovation World first landlord iphone app launched which reached top 6 free business apps in itunes Internal innovation drove operating expenditure down Conditional Sale Conditional sale agreement signed for RUN & Agentplus businesses for $55.4M cash plus $10M of stapled securities in REX fund & 25M HAL shares $4.0M deposit payable which converts to equity at 40 cents per share if deal does not conclude & RUN shareholder approval is obtained. ($3.9M paid as at 30 Aug 12) Net debt = bank debt less cash on hand

4 Debt reduction NET DEBT POSITION Jun 07 Jun 11 Jun Aug 12 Est. Jun Actual FY2012 Actual Change FY2011 FY12/FY11 Rent roll value (approx) $60M $60M - Net debt $17M $34M -$17M LVR (net debt:rent roll) 28% 57% Rent roll equity $43M $26M +$20M Est. annual interest $2.7M $3.6M -$0.9M RENT ROLL EQUITY Jun 07 Jun 11 Jun Aug 12 Est. Jun RUN s debt position has significantly improved over the period and now has a sustainable debt position Net debt position improved by $17M for the period via $15M bank refinance, and from operating cashflows. This has been subsequently further reduced to $14.0M as at 30 Aug 12. Equity in rent roll $43M as at 30 June 12 Loan to value ratio 28% Annual interest cost reduced by $0.9M per annum Debt secured against stable rent roll valued at approximately $60M RUN expects interest levels to reduce further in FY2013 through further debt repayment.

5 Profit improvement ADJUSTED RESULTS EXCLUDING GAIN FROM DEBT REFINANCE EBITDA PERFORMANCE Actual FY2012 Actual FY2011 Change FY 12/11 Revenue $28.4M $28.4M - EBITDA $4.8M $4.0M +$0.8M Amortisation $2.8M $5.5M +$2.7M Cashflow from operations* $3.1M $0.8M -$2.3M Net debt / EBITDA x 3.3 x % NET DEBT / EBITDA x 3.5 x 8.6 x 8.5 x 13.8 FY2012 EBITDA result was $19.7M including a $15M refinance benefit announced in Dec 2012 Excluding benefit from refinancing EBITDA was 18% higher than the previous year. 2nd half EBITDA was $2.9 million comparing favourably against 1st half of $1.9 million Amortisation charge (non-cash) reduced by $2.7M to $2.8M which will reduce a further $1.5M to $1.2M in FY2013 Net debt / EBITDA expected to be below x3 in FY2013 * Pre-tax

6 Continued innovation RUN s strong focus on innovation has continued in FY2012 Innovation programs focus on providing value externally, to RUN clients, and internally to create cost efficiencies and staff productivity RUN recently launched an iphone app for its landlords, providing them real time access to a comprehensive range of information relating to their investment portfolio. (download the app in itunes for free demo). The application reached Top 6 free business applications in the itunes store and has been extremely well received by existing and prospective landlords.

7 Conditional sale In May 2012 RUN announced that it had entered into two conditional and interdependent sale agreements with Rental Express Group Limited and Heritage Acquisitions Limited, pursuant to which RUN has agreed to sell its RUN Property and Agent Plus businesses, subject to the satisfaction or waiver of a number of conditions precedent. As at 30 August 2012 RUN has received $3.9M of the $4.0M deposit If the transaction proceeds, it will provide a significant value increase to shareholders and will create opportunities for RUN clients and employees. If the transaction does not proceed the deposit will be retained by RUN and converted into equity at 40 cents per share, unless RUN does not obtain shareholder approval. To be read in conjunction with RUN Corp ASX releases As at 30 August RUN Corp had approximately120m shares on issue. RUN Corp Limited 100% 100% Real Estate Business Technology & outsourced trust management business If the sale proceeds RUN Property P/L will be sold for $55.4M cash and $10M of stapled securities in the REX Property Management fund If the sale proceeds Agentplus P/L will be sold for 25M ordinary shares in Heritage Acquisitions Ltd. (HAL). On 7 August ASX:HTI announced it had entered into a HOA to acquire HAL

8 Real Estate Sales business During FY2010 RUN launched its real estate sales business. Prior to this time RUN referred sales opportunities to other agents. RUN s decision to enter the sales market assists the business drive brand recognition, assists rent roll growth and contributes to profit RUN commenced operations in this area during a very difficult sales market. For the past two years the investment in this area has had a negative contribution to earnings. In the second half of FY2012 this part of the business has turned around significantly as per the chart below. Strategically RUN s sales business is very important, if it can capture 70% of sales off its rent roll it is likely to make a significant contribution to group profits. FY12 PERFORMANCE OF SALES DIVISION BY QTR Q1 Q2 Q3 Q4 ESTIMATED SIZE OF REAL ESTATE SALES BUSINESS Current Position Sales off rent roll 1,000 1,000 1,000 1,000 % sold by RUN 100% 80% 60% 30% Estimated revenue $10M $8M $6M $3M Estimated EBITDA $3M $2.4M $2M $0.2 Note: This table only excludes sales opportunities outside the RUN rent roll which represents further opportunity.

9 Future FY2012 has been a transformational period for RUN Corp If the conditional sale agreement with REX/HAL proceeds there are substantial benefits for shareholders (see table below) If the conditional sale agreement does not occur: RUN is well positioned to leverage off a recapitalised balance sheet, and expects to generate free cash flow over the coming period the Board aims to pay a fully franked dividend. In making any decision to pay a dividend, the RUN Board will take into account RUN s earnings for the period, future capital requirements, debt repayments and other relevant factors, such as the outlook for the business. Remaining free cash flow will be reinvested into the business, and RUN will assess potential acquisitions utilising debt and equity to provide the business expanded geographical coverage, further critical mass and access to sales resources. ANALYSIS OF REX / HAL DEAL Expected amount Per RUN share Cash component less debt $35M cash $0.29 Stapled securities in REX Property Management fund $10M worth of securities $0.08 in securities Ordinary shares in HAL 25M shares 0.2 shares * The amounts referred to above are estimates only and are subject to tax & accounting treatment and exclude any costs related to distribution to shareholders. They do not constitute the expected amount to be distributed to shareholders, such amount will be determined by the Board.

10 Disclaimer The information provided is general in nature and is in summary form only. It is not complete and should be read in conjunction with the Company s detailed results and market disclosures. This material is not intended to be relied upon as advice to investors or potential investors.