EX-99.1 2 a05-15510_1ex99d1.htm EX-99.1



























 

Searchable text section of graphics shown above

 



 

Continuing the Momentum:
Financial, Operational, Strategic

 

 

C. Kent Jespersen

Non-Executive Chairman

 

Thomas I.A. Allen

Chairman, Corporate Governance

and Nominating Committee

 

Charles S. Jones

Chief Executive Officer

 

August 26, 2005

 

[LOGO]

 



 

Forward Looking Statement Disclaimer

 

This discussion includes forward-looking statements of Geac’s intentions, beliefs, expectations and predictions for the future These forward-looking statements may include use of the future tense with words such as “will,” “may,” “intends,” “anticipates,” “expects” and similar conditional or forward-looking words and phrases. These forward-looking statements are neither promises nor guarantees. They are only predictions that are subject to risks and uncertainties, and they may differ materially from actual future events or results. Geac undertakes no obligation to update or revise the information presented today and Geac disclaims any obligation to update any such forward-looking statements after today’s date. Among the risks and uncertainties that could cause a material difference between these forward-looking statements and actual events include, among other things:

 

                  our ability to increase revenues from new license sales, cross-sell into our existing customer base and reduce customer attrition;

 

                  whether we can identify and acquire synergistic businesses and, if so, whether we can successfully integrate them into our existing operations;

 

                  whether we are able to deliver products and services within required time frames and budgets to meet increasingly competitive customer demands and performance guaranties;

 

                  risks inherent in fluctuating international currency exchange rates in light of our global operations and the unpredictable effect of geopolitical world and local events;

 

                  whether we are successful in our continued efforts to manage expenses effectively and maintain profitability;

 

                  our ability to achieve revenue from products and services that are under development; and

 

                  the uncertain effect of the competitive environment in which we operate and resulting pricing pressures.

 

These and other potential risks and uncertainties that relate to Geac’s business and operations are summarized in more detail from time to time in our filings with the United States Securities and Exchange Commission and with the Canadian Securities Administrators, including Geac’s most recent quarterly reports available through the website maintained by the SEC at www.sec.gov and through the website maintained by the Canadian Securities Administrators and the Canadian Depository for Securities Limited at www.sedar.com for more information on risk factors that could cause actual results to differ from the statements discussed today.

 



 

[GRAPHIC]

 

Geac at a Glance

 

History and Development

 

                  Founded in 1971

 

                  30+ years building Enterprise Software Solutions

 

                  Historic growth through acquisitions of application software enterprises

 

Financial Statistics

 

Price as of 08/22/05

 

Cdn$

12.14

 

Market Cap

 

Cdn$

1.05B

 

FY2005 Revenue

 

$

444.4M

 

FY2005 EPS

 

$

0.87

 

FY2005 Net Earnings

 

$

77.0M

 

Total Cash as of 04/30/05

 

$

188.2M

 

 

Business Summary

 

                  Leading financial and operational technology solutions software and service provider

                  Provides best-in-class technology solutions for the issues confronting the CFO

                  Technology products and services divided into two business segments:  Enterprise Applications Systems and Industry Specific Applications

                  2,200 employees in 52 locations around the world

                  18,500 customers worldwide

                  12,800 customers in the United States; including 48 of the Fortune 100

 

3



 

 

Geac’s Transformation

 

Geac has delivered for shareholders.  Since 2003 we have:

 

                  Strengthened our executive team

 

                  Acquired and integrated two key businesses

 

                  Reduced costs

 

                  Penetrated and entered new markets

 

                  Driven new revenue through product and marketing innovation

 

Actions taken by current leadership have resulted in dramatically improved financial results

 

4



 

 

 

Significant Performance Improvement

 

During the past two fiscal years, a period that closely tracks the tenure of Geac’s current leadership team:

 

                  Net earnings have increased 141%, to $77.0 million ($0.87 per diluted share), up from $31.9 million ($0.39 per diluted share)

 

                  EBITDA margin increased to 22.5% from 16.1%

 

                  Cash and equivalents more than doubled to $188.2 million from $89.8 million. 

 

5



 

 

 

Strong Financial Performance

 

License Revenue as a Percentage of Total Revenue

 

[CHART]

 

Net Earnings Margin

 

[CHART]

 

EBITDA Margin

 

[CHART]

 

Cash and Short-Term Investments

 

[CHART]

 

6



 

 

 

Operating Performance vs. Peers

 

License Revenue Growth
(LTM 2 Year CAGR)

 

[CHART]

 

Total Revenue Growth
(LTM 2 Year CAGR)

 

[CHART]

 


(1)

Organic license revenue CAGR over the period was 24.5%, with the remainder coming from acquisitions

(2)

Organic total revenue CAGR over the period was 16.4%, with the remainder coming from acquisitions

 

7



 

 

 

Financial Performance vs. Peers

 

EPS Growth
(LTM 2 Year CAGR)

 

[CHART]

 

LTM EBITDA Margin

 

[CHART]

 


(1)          Large percentage increase due to small LTM EPS figure at 6/30/2003 of $0.03, increasing to $0.21 at 6/30/2005

 

8



 

 

 

Outstanding Stock Performance

 

                  Geac’s share price up 129% to Cdn$12.14 on August 22, 2005, from Cdn $5.29 on July 17, 2003.

 

                  By comparison, the NASDAQ and the TSX Composite Index and a benchmark of our peers increased only 26%, 49% and 26%, respectively, over the same period. 

 

[CHART]

 


(1)          Consists of Business Objects, Cognos, Hyperion, Lawson, Manhattan Associates, Epicor, JDA Software and Intentia

 

9



 

 

Continue to Build Revenue Growth Engine

 

                  Expand and integrate offerings

 

                  Sell solutions, not just products

 

Additional Cost Reductions

 

                  Target: reduce support and development costs an additional 30% over 2 years

 

Strategic Acquisitions

 

                  Increase competitiveness

 

                  Grow license revenue base

 

                  Add scale

 

10



 

 

 

Performance Management:
Geac’s Differentiator

 

BUILD BUY PARTNER

 

Geac Performance Management

 

Umbrella Strategy

 

Strategy Management

Compliance Management

Statutory Reporting

Time Capture

Budgeting, Planning, Forecasting

Financial/Mgmt Reporting

Expense Reporting

Supply Chain

Financial Consolidations

Score Carding

 

Connectivity Framework

 

Enterprise Applications

Ubiquitous Platforms (open architecture)

 

Core Strategy

 

E&M

SmartStream

System21

Anael

Local Govt.

Libraries

Runtime

 

 

Outside the Umbrella

Interealty

Public Safety

Restaurants

 

Note: Performance management has been integrated into several Enterprise Applications: Anael, Enterprise Server, Property Management and Local Government all offer performance management functionality.

 

11



 

 

 

Financial Value Chain: CFO’s Domain

 

Financial Value Chain

 

Financials

HR/Payroll

 

Credit and Collections

 

Fixed Assets

Procurement

 

Expense Management

 

Supply Chain

Inventory

 

Time Reporting

 

Accounting

 

 

Compliance

 

 

TRANSACTIONS

 

PROCESS(ES)

 

MEASUREMENT

 

 

 

 

Approval and Workflow

 

 

 

 

 

 

 

Trade Promotion

 

Strategy

Consolidation

 

 

 

 

Risk Management

 

Forecasting

Activity-Based

 

 

 

 

Business Process Management

 

Planning

   Costing/Management

 

 

 

 

 

 

Budgeting

 

 

 

12



 

 

 

Revenue Growth Engines

 

Continue to build new products internally

 

Increase maintenance revenue by replicating success of Aurora into other product lines

 

Target additional sales of integrated products

 

Cross-sell products into existing client base

 

Build on domain expertise (government, financial services, specialty retail, healthcare)

 

13



 

 

 

Recent Successes

 

Organic growth engine beginning to take hold

 

                  28% of new licenses in the fourth quarter were new products

 

                  Multiple products being integrated into single solutions

 

                  Multi-product solutions have been sold to Apparel retailers such as Animal and VF Europe, incorporating Runtime, System21 and MPC.  These unique solutions, which consist of ERP, CRM, PLM and Budgeting/Planning meet this industry’s needs.

 

Value for Maintenance Program has resulted in maintenance attrition under 10%

 

System21 Aurora Project has revitalized System21, and extended its lifecycle

 

Bundling of products and cross-selling is driving more revenue synergies

 

14



 

 

 

Continuing Focus on Cost Reduction

 

Targeting Development and Sales/Marketing expenses for additional improvement

 

                  Combine certain products for added efficiencies

 

                  Combine support and R&D functions in certain legacy product lines

 

Assessing implementation of cost-saving programs for customer service and R&D

 

Continue to increase efficiency of development spending

 

                  Offshore significantly more R&D and some support functions to lower-cost countries

 

Product group consolidation

 

Additional real estate savings

 

15



 

 

 

Acquisition Strategy

 

Business Intelligence Platform

 

                  We are currently platform agnostic

 

Performance Management Applications

 

                  Fill in the Financial Value Chain (e.g., Activity-Based Costing)

 

Consolidation of another ERP Company

 

Current Management and Board are disciplined and prudent buyers

 

16



 

 

 

Geac Board Nominees:
Proven Leadership

 

Our Board is independent, strong, highly experienced, and along with our management team, dedicated to supporting Geac’s success through responsible and well-considered strategic actions that create and return value to all shareholders.

 

C. Kent Jespersen

Chairman of the Board, Geac

Chairman, La Jolla Resources International Ltd.

 

Thomas I.A. Allen, Q.C.

Senior Partner, Ogilvy Renault

 

David Friend

General Partner, Orchid Partners

 

Pierre MacDonald

Chairman and Chief Executive Officer, MacD Consult Inc.

 

Michael D. Marvin

Founder and Chairman Emeritus, MapInfo Corporation

 

William G. Nelson

Private Investor

Geac’s 10th largest shareholder

 

Robert L. Sillcox

Cofounder and former Chairman, Quant Investment Strategies Inc. 

 

Charles S. Jones

President and Chief Executive Officer, Geac

 

17



 

 

 

No Insiders on Governance Committees
Ensures Strong Governance

 

Audit Committee

 

Compensation Committee

 

Governance and Nominating Committee

Thomas I.A. Allen

 

C. Kent Jespersen

 

Thomas I.A. Allen

C. Kent Jespersen

 

Pierre MacDonald

 

David Friend

Pierre MacDonald

 

Michael D. Marvin

 

William G. Nelson

William G. Nelson

 

 

 

Robert L. Sillcox

Robert L. Sillcox

 

 

 

 

 

18



 

 

 

Strong Governance

 

Geac Board meets all governance legislative requirements and policy guidelines:

 

                  Board accountable through annual election of directors

 

                  Composed of unaffiliated directors, except for CEO

 

                  CEO has no interlocking board relationships

 

                  Roles of Chairman and CEO separated

 

                  Internal audit function and Director of Internal Audit oversees Sarbanes-Oxley compliance efforts

 

                  Interests aligned with stockholders through director stock ownership requirements

 

                  Director self-evaluation program to maximize benefit Board draws from each member

 

19



 

 

 

Director Allen: Governance Credentials

 

                  Public director of the Investment Dealers Association of Canada (“IDA”) for several years, also member of its Executive Committee

 

                  Chairman of the “Allen Committee”, appointed by the TSX to review quality of disclosure to secondary trading markets; Committee recommendations substantially enacted into law, which take effect 2006

 

                  Member of the Zimmerman Committee, appointed by the IDA to make recommendations re: Canada’s take-over bid rules; Committee recommendations substantially enacted into law

 

                  Member of the former Advisory Board of the Office of the Superintendent of Financial Institutions of Canada

 

                  Initial Chairman of the Accounting Standards Oversight Council of Canada, served 4 year term

 

                  A member of the “Wise Persons Committee” appointed by the Minister of Finance to make recommendations re: structure of regulation of the securities markets in Canada

 

                  Recently appointed by the IDA to be Chairman of 10-person Task Force to Modernize Securities Regulation in Canada

 

                  Listed in “Guide to the World’s Leading Corporate Governance Lawyers,” published by Euromoney Institutional Investor PLC in association with the International Financial Law Review

 

                  Listed in the International Who’s Who of Corporate Governance Lawyers

 

20



 

 

 

Crescendo’s Platform

 

Crescendo has not offered any new ideas

 

                  Crescendo’s platform has two elements – both of which are already in process at Geac

                  “Don’t overpay for acquisitions”

                  “Hire investment bank to explore options”

 

In fact…

 

                  Bear, Stearns & Co. has been retained since late 2004 on acquisition and overall strategic reviews

                  Geac has shown discipline in acquisitions – we will not overpay

                  Most recent acquisition, Comshare, purchased for .66x revenue – multiple well below comparable transactions at the time

                  In last 9 months, Geac walked away from 2 large acquisitions of leading software companies after extensive due diligence due to valuation concerns

 

21



 

 

 

Proven Leadership Delivering
Superior Shareholder Value

 

Geac’s current leadership has proven itself, and the company is well positioned to continue to deliver superior shareholder value:

 

                  Dramatic improvement in financial performance

 

                  Stock price significantly outperforming all peers and indices

 

                  Independent Board with strong governance structure

 

                  Current leadership will continue to act in best interests of ALL shareholders

 

22



 

Appendix

 

 



 

 

 

Five Year Momentum

 

 

 

FY2001

 

FY2002

 

FY2003

 

FY2004

 

FY2005

 

TSX share price

 

 

 

 

 

 

 

 

 

 

 

(as of April 30, in CAD)

 

$

1.73

 

$

4.25

 

$

5.45

 

$

8.18

 

$

10.42

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross profit margin percentage

 

49.5

%

54.6

%

58.6

%

60.7

%

63.9

%

 

 

 

 

 

 

 

 

 

 

 

 

License sales as a percentage of revenue

 

10.8

%

11.6

%

12.1

%

14.6

%

16.0

%

 

 

 

 

 

 

 

 

 

 

 

 

License sales (in USD)

 

$

59,782

 

$

53,410

 

$

49,380

 

$

65,190

 

$

71,040

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings from operations before income taxes as a percentage of revenue

 

(47.2

)%

11.9

%

13.0

%

15.9

%

19.8

%

 

24



 

 

 

Consolidated Balance Sheets
as at April 30, 2005 and 2004
(Millions of USD)

 

 

 

April 30, 2005

 

April 30, 2004

 

 

 

(unaudited)

 

(unaudited)

 

Assets

 

 

 

 

 

Cash and cash equivalents

 

$

188.2

 

$

86.1

 

Short-term investments

 

0.0

 

$

26.5

 

Accounts receivable*

 

56.9

 

55.8

 

Goodwill

 

110.1

 

128.4

 

Other assets

 

111.0

 

110.1

 

Total assets

 

$

466.2

 

$

406.9

 

 

 

 

 

 

 

Liabilities

 

 

 

 

 

Accounts payable & accrued liabilities

 

73.4

 

79.7

 

Deferred revenue

 

114.7

 

120.2

 

Long-term debt

 

5.1

 

4.9

 

Other liabilities

 

52.7

 

66.0

 

Total liabilities

 

$

245.9

 

$

270.8

 

 

 

 

 

 

 

Shareholders’ equity

 

$

220.3

 

$

136.1

 

 

 

 

 

 

 

Total liabilities & equity

 

$

466.2

 

$

406.9

 

 


* Accounts Receivable includes accounts receivables and other receivables as well as unbilled receivables

 

25



 

 

 

Consolidated Statements of Cash Flows
for the years ended April 30, 2005 and 2004
(Millions of USD) 

 

 

 

2005

 

2004

 

 

 

(unaudited)

 

(unaudited)

 

Cash flows from operating activities

 

 

 

 

 

Net earnings for the period

 

$

77.0

 

$

57.2

 

Other operating activities

 

3.0

 

9.4

 

Net cash provided by operating activities

 

80.0

 

66.6

 

 

 

 

 

 

 

Net cash (used in) provided by investing activities

 

17.2

 

(48.2

)

 

 

 

 

 

 

Net cash used in financing activities

 

(1.5

)

(2.8

)

 

 

 

 

 

 

Effect of f/x on cash and cash equivalents

 

6.5

 

0.7

 

 

 

 

 

 

 

Net increase in cash and cash equivalents

 

102.2

 

16.3

 

Cash and cash equivalents - beginning of period

 

86.0

 

69.8

 

 

 

 

 

 

 

Cash and cash equivalents - end of period

 

$

188.2

 

$

86.1

 

 

26



 

 

 

Consolidated Statements of Earnings
for the years ended April 30, 2005 and 2004
(Millions of USD) *except EPS

 

 

 

Twelve Months Ended Apr 30

 

 

 

2005

 

2004

 

 

 

(unaudited)

 

(unaudited)

 

Revenue

 

$

444.4

 

$

445.3

 

Cost of Revenue

 

(160.4

)

(175.1

)

Gross Profit

 

284.0

 

270.2

 

 

 

 

 

 

 

Operating Expenses

 

(199.9

)

(197.9

)

Other Income (Expense), net

 

4.0

 

(1.4

)

 

 

 

 

 

 

Income Taxes

 

(11.1

)

(13.7

)

Net Earnings

 

$

77.0

 

$

57.2

 

 

 

 

 

 

 

EPS* (Diluted $US)

 

$

0.87

 

$

0.66

 

 

27



 

 

 

Adjusted EBITDA

 

 

 

Year ended

 

 

 

April 30,

 

 

 

FY2005

 

FY2004

 

 

 

 

 

 

 

Canadian GAAP based “Total revenue”

 

444,392

 

445,272

 

 

 

 

 

 

 

Canadian GAAP based “Net earnings”

 

77,024

 

57,166

 

 

 

 

 

 

 

Net earnings as % Total revenue

 

17.3

%

12.8

%

 

 

 

 

 

 

Diluted E.P.S.

 

0.87

 

0.66

 

 

 

 

 

 

 

Add back:

 

 

 

 

 

Income taxes

 

11,125

 

13,674

 

Interest income

 

(3,318

)

(1,265

)

Interest expense

 

1,583

 

1,289

 

Other (income) expense, net

 

(2,252

)

1,374

 

Amortization of intangible assets

 

9,161

 

7,589

 

Amortization of deferred financing costs

 

943

 

607

 

Depreciation of property, plant and equipment

 

5,930

 

7,243

 

 

 

 

 

 

 

EBITDA

 

100,196

 

87,677

 

 

 

 

 

 

 

EBITDA as % Total revenue

 

22.5

%

19.7

%

 

 

 

 

 

 

EBITDA E.P.S.

 

1.14

 

1.02

 

 

 

 

 

 

 

Add back:

 

 

 

 

 

Stock based compensation

 

6,527

 

2,385

 

 

 

 

 

 

 

ADJUSTED EBITDA

 

106,723

 

90,062

 

 

 

 

 

 

 

ADJUSTED EBITDA as % of Total revenue

 

24.0

%

20.2

%

 

 

 

 

 

 

ADJUSTED EBITDA per share

 

1.21

 

1.04

 

 

28