ANDREW DUTTON Chairman
5 NOV 2014
The 2015 financial year has been demanding and eventful, but it has also seen our management and staff rise to the operational and strategic challenges presented. The two halves were quite distinct, but both have shaped strategy and provided the strong momentum with which SAI Global concluded the year.
The Board received an indicative, conditional and non-binding offer for the Company from Pacific Equity Partners, announced by SAI Global in May 2014. This interest, together with that from other parties, led to a formal process to review the Company's strategic options.
Following engagement with the parties and a comprehensive review of SAI Global's potential, the Board announced on 13 October 2014 that discussions would not result in a transaction that would be in the best interests of shareholders.
While the formal process was time consuming, it enabled a thorough evaluation of SAI Global's strategy and affirmed our confidence in the strategic objective of developing an integrated risk management platform encompassing SAI Global's full range of products and services.
The appointment of Peter Mullins as SAI Global's new Chief Executive Officer on 5
November 2014 heralded the commencement of the program to bring the strategy to fruition through combining the Assurance, Compliance and Standards & Technical Information divisions to form the Risk Management Solutions business.
The changes required to dismantle the siloed structure of SAI Global and to enhance the sales and marketing capabilities of the integrated business have taken place largely in the second half of this financial year. Accordingly, this has also been a busy period. The Company has undergone a major organisational transformation with each stage of change carefully planned and implemented, and incentive structures realigned until, effective from 1 July 2015, the Risk Management Solutions business began operating alongside our Property Services business.
As we progress through FY16, a critical element of SAI Global's strategic direction is a focus on driving revenue growth, both organically and through acquisition. Our new, more purposeful and efficient structure has given strong impetus to our sales and marketing efforts and has positioned the company well in its chosen markets to acquire quality businesses at fair value.
In the midst of the significant changes implemented this year, the financial performance of the Company has been very pleasing, with material improvements in margin and profitability.
Net profit after tax attributable to shareholders increased to $39.3M, up 11.2% from $35.3M in FY14, while underlying net profit after tax was $55.6M, a 23.6% improvement over the prior corresponding period.
EBITDA increased by 10.9% to $103.5M, up from $93.3M in FY14 and underlying EBITDA of $126.3M is a 17.9% improvement over the prior corresponding period.
These results reflect management's pursuit of operational efficiency initiatives and a
continued focus on our cost base which have seen direct costs reduce by 0.2%, notwithstanding the growth in revenue.
The costs of implementing the comprehensive transformation project to align the Standards & Technical Information, Compliance and Assurance divisions into an integrated Risk Management Solutions business as well as the operational efficiency initiatives are reflected in the one-off significant charges incurred this year. These costs totalled $13.9M and comprise a combination of external consulting assistance, workforce reductions and office rationalisation that will deliver permanent cost base reductions from FY16 onwards.
The Company's improved profitability has led the Board to resolve to pay a final dividend of 9 cents per share, 7.2 cents of which is franked. This equates to an 80% franking level.
The final dividend takes total dividends for the year to 16.5 cents, up 6.5% compared to last year. The final dividend will be paid on 23 September 2015.
Peter Mullins was appointed as SAI Global's new Chief Executive Officer and Managing Director on 5 November 2014 and, as such, joined the Company's Board.
With the appointment of Peter, I have reverted to the role of Non-Executive Chairman and Peter Day has relinquished his interim position of Deputy Chairman, reverting to the position of independent, Non-Executive Director.
SAI Global is committed to diversity and strives to build a vibrant and inclusive workplace, reflective of the communities in which it operates.
Equal opportunity is at the core of the Company's People strategy as the Board believes that a diverse workforce is critical to attracting and retaining talented people. In particular, the Board is convinced that gender diversity in leadership positions facilitates different and more innovative thinking, more informed decision-making and, ultimately, better business outcomes.
While at the end of FY15, 52.2% of SAI Global's global workforce was female, compared with 52.5% at the end of FY14, the Board would like to see more women in the Company's senior management ranks.
Accordingly, SAI Global has adopted the ASX Corporate Governance Council's gender diversity principles and has set a target to increase the proportion of women in senior management roles at SAI Global (defined as employees in levels C1, C2, where the CEO is level C, C1 is a direct report of the CEO, etc, from 28% at the end of FY11 to between 35% and 40% by the end of FY16. As of 30 June 2015 this target had been achieved with 36.2% of C1 and C2 being female, up from 31% at 30 June 2014.
In support of further increasing this percentage, the Board has reviewed the Company's approach to equal opportunity and agreed with management the following specific actions aimed at increasing the proportion of females in management:
A copy of this policy is included in the Company's annual public report for 2015, as lodged with the Workplace Gender Equality Agency, and is available on the SAI Global website.
At the Board level, two of the six Non - Executive Directors are female.
The FY15 results have been achieved during a challenging period and it's a credit to our dedicated and customer-focused employees who are the heart and soul of SAI Global.
As we move into the 2016 year, and on the back of our refocused strategic direction, our people are energized and motivated by the potential growth and the opportunities to continue to deliver exceptional services to our customers around the world.
Our new operating model was effective on 1 July 2015 and this is expected to contribute to improved profitability in FY16. A key element of this change is an increased focus on the effectiveness of our sales and marketing functions. We anticipate that this will result in a gradual improvement in constant currency organic revenue growth.
The weakened Australian dollar is expected to provide a tailwind for earnings from our overseas operations in FY16.
Inorganic growth through targeted acquisitions also remains a key element of our strategy, particularly as the markets in which we operate continue to consolidate and provide opportunities.
In closing, I would like to thank our staff, led by Peter Mullins and his senior leadership team for their efforts during the year, as well as my Board colleagues and our shareholders for your continued support.