Purpose, Vision, Values and Business Model “Only a commitment by all the team will bring SAI Global’s vision alive”
Ross Wraight CEO February 2007
APPLIED INFORMATION SERVICES
2
Facilitators:
Ross Wraight, Chief Executive Officer
Andrew Jones, Group Director Human Resources
Welcome
3
Roll out SAI Global’s Purpose, Vision, Values and Business Model to all employees
Gain an understanding of their impacts on our stakeholders
To gain your commitment to the Purpose, Vision & Values
To agree behaviours that align with our Purpose, Vision & Values and to identify behaviours that do not
What are we to achieve today?
5
Why have a Business Model?
Our Business Model is the embodiment of our Purpose & Vision
It shows how the parts of the business fit together
The Business Model shows how through working together the value of SAI Global is more than the sum of its parts
It differentiates us from our competitors
1.1 SAI Global Business Model
6
1.1 SAI Global Business Model
SAI Global is an applied information services company. It:
Is your source for global technical and business information
Provides end-to-end training solutions around critical business information
Helps you understand, implement and manage the information associated with business systems and processes
Enables you to verify your understanding of information by providing independent assessment, certification and registration.
7
1.1 SAI Global Business Model
Distribution DatabasesSearch
Apply Business SolutionsProvide Information
ConformityAssessment
- Product - Food - Systems
Audit Effectiveness
PUBLISHING
Supported by TRAINING and BUSINESS IMPROVEMENT SOLUTIONS (Professional Services)
Standards
Legislation
Databases
Property
Other Technical
Alerts
News feeds
Monitoring
Awareness and understanding
COMPLIANCE ASSURANCE
8
1.1 SAI Global Business Model
Summary:
SAI is a top 300 company listed on the ASX with a market capitalization $574M, January 30, 2007
2006/7 Est. revenues >A$210 million
2006/7 Est. EBITDA of >A$42 million
More than 800 professionals with 353 offshore
Physical operations in Asia-Pacific, Europe and North America
Customers across the world
70% of revenue is annuity type
Capex is small
9
1.1 SAI Global Business Model
Industry demand drivers:
Globalization
Corporate compliance
Risk management
Brand reputation protection
Fraud and corruption control
Regulation and Industry standards
Improved productivity
Long supply chains
Customer and consumer confidence
Greater demand for SAI Globalservices
High growth rates
10
1.1 SAI Global Business Model
Value proposition for our services:
In essence, SAI Global helps organizations comply with therequirements that shape the business world, it:
Provides easy on-line access to millions of items of Standards, regulatory and technical information
Takes the burden out of regulatory and internal compliance Protects brands and reputations Pushes information and training where and when its needed Simplifies cross-border and language exchange Provides supply chain confidence Improves and sustains business
11
1.1 SAI Global Business Model
Business Competitors:
SAI is the first organization of its type to list on a stock exchange and has no direct equivalent
In the international technical publishing space SAI competes with IHS, Reed Elsevier and Thomson
There are numerous competitors in regulatory compliance space but few offer SAI’s end-to-end solutions. Competitors include:
Complinet and Lexis Nexis for alerts and news feeds
Paisley and Methodware for monitoring systems
LRN and Integrity interactive for communication and awareness
In the certification space SAI competes with organizations such as SGS, Lloyds Register, BSI & Bureau Veritas
The training and consulting market is highly fragmented and SAI has numerous competitors
12
1.1 SAI Global Business ModelRevenue by business Revenue by region
AS
BP
PSCS
Australia
Europe
Asia
Nth America
BP=Publishing, CS=Compliance, PS=Professional Services, AS=Assurance
13
1.1 SAI Global Business Model
Financial Performance - Group
Revenue
0
50
100
150
200
250
00/01 01/02 02/03 03/04 04/05 05/06 06/07
A$M
EBITDA
0
10
20
30
40
50
00/01 01/02 02/03 03/04 04/05 05/06 06/07
A$M
14
Financial Outcomes – Half Year 2006/07
– Underlying Business Performance–Revenue1 up 46.7% to $100.8 million, –EBITDA up 50.6% to $19.3 million
– AIFRS Reported Results–NPAT up 38.1% to $8.1 million, –EPS up 3.6% to 5.7 cents
– Underlying Cash Earnings–Cash earnings up 35.5% to $12.3 million, –Cash earnings per share up 1.2% to 8.6 cents
1. Excludes interest income
15
1.2 Publishing
Build a world leading international, technical publishing, distribution and information business
Approximately A$70M revenue, mainly recurrent revenue
Delivers a major and stable annuity earnings engine
Operations in Australia, Europe and North America
Non-exclusive licenses with more than 250 international standards bodies including BSI (UK), ASTM (USA) and NFPA
Exclusive distributor of Irish Standards and Australian Standards
Distributor of USA Military Specifications
16
Business Publishing – Half Year 2006/07
6 Months 1H07 1H06 Change$M $M %
Revenue 36.7 22.3 64.2
EBITDA 11.7 6.7 75.3
EBITDA margin (%) 31.9% 29.9% 6.7
2005 1st half
2005 1st half
Revenue
0
20
40
60
FY01 FY02 FY03 FY04 FY05 FY06 1H07
A$M
EBITDA
0
5
10
15
20
FY01 FY02 FY03 FY04 FY05 FY06 1H07
A$M
18
1.2 Publishing
Key Services:
Watching Services Standards Watch – More than 140,000 subscribers Regulatory News Feeds – Track & monitor Australian law
Search & Database Services Standards Online Select – More than 1,000 customers Standards Premium Select – More than 300 customers Standards Infobase – More than 700,000 Standards Metals Infobase – Search 14,000 related Standards & materials &
70,000 grades Eurolaw Database – search industry treaties, directives, regulation and
case law Logicom – 150 million items covering military parts & logistics Webshop – Download a PDF or print-on-demand
19
1.2 Publishing
Outlook:
Business model produces excellent financial outcomes and is efficient, transportable and scalable
Increasing use of electronic delivery services Penetration of non-traditional markets through Anstat and ILI
acquisitions Growth opportunity in global Standards and database markets Aggressive targeting of new business opportunities Continued revenue and EBITDA growth
20
1.3 Compliance
Our strategy in this business is to establish a leading global scale business in the international compliance management, training, awareness and solutions market
Cost effective electronic solutions in multiple languages and countries
Presence in key geographic markets with content capability and range
Effective pricing and marketing models for solutions, retail and tools markets
Solutions underpinned by proprietary technology
Fragmented market Blue chip client base
Revenue
0
5
10
15
20
25
30
00/01 01/02 02/03 03/04 04/05 05/06 06/07
A$M
EBITDA
0
1
2
3
4
5
6
7
00/01 01/02 02/03 03/04 04/05 05/06 06/07
A$M
21
Compliance Services – Half Year 2006/07
6 Months 1H07 1H06 Change$M $M %
Revenue 10.1 7.3 38.6
EBITDA 1.6 1.5 10.6
EBITDA margin (%) 16.3% 20.4% (20.0)
2005 1st half
2005 1st half
Revenue
0
5
10
15
20
FY01 FY02 FY03 FY04 FY05 FY06 1H07
A$M
EBITDA
0
1
2
3
4
FY01 FY02 FY03 FY04 FY05 FY06 1H07
A$M
22
1.3 Compliance
Key subject areas:
Financial compliance Anti Money Laundering, Operational Risk, Fraud, Consumer Protection
Asset protection Information Security, Employees, EHS, Privacy & Data Protection
Business ethics Governance, bribery, fraud, conflicts of interest, antitrust, diversity
Managing Risk Process & system management, OHS, IPR, procurement
SAI provides business solutions underpinned by proprietary technologies
23
1.3 Compliance – Business Model
Risk & Compliance Framework(common to all programs)
Know what
affects you
Create Policy
Communicate & Train
Monitor Activity
Report on Activity
Audit Results
Compliance Guidelines & Update Services
Learning Content & Services
Risk & Compliance Monitoring Toolkit &
Implementation Services
Audit Services
SAI Change Management & Project Management Services(recommended through all stages of the process)
Apply Business Solutions
24
1.3 Compliance
Why are compliance services important for SAI?
They are an integral part of the SAI business model
There is a growing need for cost effective solutions to the compliance issues that organizations need to deal with - increasingly on a global scale
There are strong demand drivers for services, resulting in high organic industry growth rates. USA led the way, Europe and other markets “catching up”
There is currently a fragmented supply of services which provides the opportunity for SAI to establish a leading position in the market
25
1.3 Compliance
Why are compliance services important for SAI? (cont.)
Strong profit outcomes are expected and consequently compliance assets are increasing in value
SAI is experiencing strong growth in both headline sales and recognized revenue for all major compliance product streams
SAI’s compliance division’s organic growth for the first half ended 31 Dec 06 exceeded 20%
The flow through to the profit contribution from the compliance division has been impacted by investment in sales infrastructure and product development
26
1.3 Compliance
Outlook:
Growing recurring revenue base Growing regulatory demand for compliance Consolidation occurring at the technology end Developing opportunities through SAI Global relationships Continued revenue and EBITDA growth
27
1.4 Training and Business Improvement Solutions
Our strategy in this business is to diversify product range and develop sources of recurring revenue that drive growth and profitability improvement
Continue to develop non-standards based products
Development of information based products
Business development component of our value chain
Few recurring revenue streams Standards based product sales
depend on new product releases
28
Professional Services – Half Year 2006/07
6 Months 1H07 1H06 Change$M $M %
Revenue 10.8 10.4 3.1
EBITDA 0.8 0.7 21.0
EBITDA margin (%) 7.9% 6.7% 17.9
2005 1st half
2005 1st half
Revenue
0
5
10
15
20
25
30
FY01 FY02 FY03 FY04 FY05 FY06 1H07
A$M
EBITDA
(1)
0
1
2
3
FY01 FY02 FY03 FY04 FY05 FY06 1H07
A$M
29
Key Services:
Solutions- Public courses- Seminars- Workshops- Instructor-led & in-house training- e-learning Subject Areas- Six Sigma - Quality- Environment- Workplace safety- Food safety- Information security- Lead auditing
1.4 Training and Business Improvement Solutions
30
1.4 Training and Business Improvement
Outlook:
Significant growth in business improvement products
Electronic training model starting to grow strongly (technology now available through compliance services)
Continued revenue and EBITDA growth
31
1.5 Assurance Services
Our strategy in this business is to establish SAI Global as a leading international assurance business
Recurrent revenue streams, solid growth and profit model
Physical presence in key geographic markets Products deliver brand protection, consumer
and customer confidence Integrated offering i.e. QMS, EMS, workplace
safety, ISMS Consistent international delivery platform with
people capable of delivering Competitive advantage from “Five Ticks”
StandardsMark Supplier and customer driven industry
consolidation Growth in new products such as food safety,
corporate governance and social responsibility
Revenue
0
20
40
60
80
100
00/01 01/02 02/03 03/04 04/05 05/06 06/07
A$M
EBITDA
0
5
10
15
00/01 01/02 02/03 03/04 04/05 05/06 06/07
A$M
32
Assurance Services – Half Year 2006/07
6 Months 1H07 1H06 Change$M $M %
Revenue 43.2 28.4 52.0
EBITDA 6.1 4.6 30.3
EBITDA margin (%) 14.0% 16.4% (14.6)
2005 1st half
2005 1st half
Revenue
0
20
40
60
80
FY01 FY02 FY03 FY04 FY05 FY06 1H07
A$M
EBITDA
0
4
8
12
FY01 FY02 FY03 FY04 FY05 FY06 1H07
A$M
33
1.5 Assurance ServicesProprietary Technologies & Trademarks Auditor Management System “Five Ticks” StandardsMarkServices Management systems registration Product certification Gap analysis Second party audit Supply chain complianceSubject Areas Quality Environment Workplace safety Food safety Information security Product safety
34
1.5 Assurance Services
Outlook:
Continued development of global audit network
Supplier and customer driven industry consolidation
Growth in new products such as food safety, corporate governance and social responsibility
Continued revenue and EBITDA growth
35
1.6 Financial Imperatives
Improve operational efficiency- Identify and eliminate duplication and wasted time- Improve processes, become more efficient- Cost to income ratio must continually decline
Integrate acquisitions- Realize cost and revenue synergies quickly
Establish regional shared service functions- Europe - advanced - Nth America - commencing, Midi acquisition being the catalyst
Improve reporting timetables- Systematic migration to common accounting platforms
Global approach to tax, cash, and franking credit management
36
1.7 Financial and Strategic Outlook
First half financial performance in-line with expectations
Other than the impact of the acquisitions, full year in line with plan
Organic growth of 6-8%
Strong earnings per share growth expected in FY08 and FY09
Two to three acquisitions in the next twelve months likely
37
How were our Purpose, Vision and Values derived?
Developed by EXCO at September 2006 meeting
Presentation to all SAI Global staff during Q1 2007
2. Purpose, Vision and Values
38
Who are SAI Global’s Stakeholders?
Our customers
Our shareholders
Our employees; and
The community
2. Purpose, Vision and Values
39
Why have a Purpose?
An organizational purpose communicates to all our stakeholders what SAI Global is in business to achieve
It assists us to remain focused on our core business activities
To be effective our Vision, Values and Business Model must support and be aligned with our Purpose
For an organization’s Purpose to appeal to all Stakeholders, it must meet the highest moral and ethical standards
2.1 Purpose
40
Our purpose:
SAI Global, an applied information services company, helps organizations manage risk, achieve compliance and drive business improvement.
It enables organizations to improve, and enhances the confidence of their stakeholders, by:
- delivering standards, regulatory and technical information;
- adding value to this information through aggregation and interpretation;
- creating training, communication and monitoring solutions; and
- providing assurance through independent assessment.
2.1 Purpose
42
What are our objectives? SAI Global can build stronger and longer lasting relationships with its customers by communicating explicitly how it improves business through its applied information services.
When communicating, these are the messages we want our customers to hear:
– we help improve business– we offer a range of services– we provide direction and tools for businesses to help themselves– we simplify confusion– we help businesses overcome obstacles
2.1 Purpose
43
Why have a Vision?
A Vision communicates to all our stakeholders SAI Global’s strategic intent and how we propose to achieve it
It creates an easily understood goal that everybody associated with SAI Global can strive to achieve
A vision is a picture of what the future could be like. As such it should be inspirational and stretching
The Vision supports the Purpose and how we plan to build on it
To achieve our Vision our Values and Business Model must also support and align with the Vision
2.2 Vision
44
Our Vision:
To be the world’s leading applied information services company we need to:
- achieve international scale;- deliver our customers outstanding products, processes and services.
We will do this through:
- the dedication of our people;- our commitment to excellence in governance;- driving superior shareholder returns.
2.2 Vision
45
Why have Values?
Organizational Values help define the culture of an organization. They paint a vivid picture of “How we do things around here”
They succinctly articulate how SAI Global will treat its people and the behaviours it expects in return
They add an extra dimension to decision making by constantly reminding us “How” things should be achieved in SAI Global
An organization's values must be in line with its purpose and the vision that it is trying to achieve
They are of no value if they are not put into practice across SAI Global
2.3 Values
46
Our Values:
SAI Global employees are at the core of its business and it is committed to:
- Showing respect- Developing careers- Offering challenging opportunities- Building great teams- Making work fulfilling
At SAI Global we pride ourselves on the fact that our employees are:
- Customer focussed- People of integrity- Responsible - Forward thinking and innovative- Focussed on performance
2.3 Values
47
SAI Global’s commitment to showing respect…
2.3 Values – what do and don’t they mean?
Does Mean Does Not Mean
- People are valued for the contribution they make- Diversity is encouraged and respected- Opinions or suggestions are welcomed, listened and responded to- There is no monopoly on wisdom- Harassment, discrimination or vilification in any format is unacceptable
- All ideas are implemented- All requests can be actioned- Under-performance is acceptable
48
SAI Global’s commitment to developing careers…
2.2 Values – what do and don’t they mean?
Does Mean Does Not Mean
- Professional development and learning will be encouraged- High levels of Competence/Skill will be expected- Career ambitions can be fulfilled- For some a career will be a lifetime of doing the same job well – this is OK too
- SAI Global will organise all learning activities- Development outside the needs of SAI Global is a priority- Career progression comes easily
49
SAI Global’s commitment to offering challenging opportunities…
2.2 Values – what do and don’t they mean?
Does Mean Does Not Mean
- Offering opportunities that have meaning and align with professional development needs- Employees will be “stretched” to fulfil their potential- Where ever possible we will offer variety and broaden our people’s experience
- Employees will be “dropped in the deep end”- Everyone can pick and choose the opportunities they want all the time- Less attractive work will be always be for somebody else
50
SAI Global’s commitment to building great teams…
2.2 Values – what do and don’t they mean?
Does Mean Does Not Mean
- We welcome different points of view within our teams. Focussing on an issue from all perspectives leads to the best result - We appreciate that the essence of good teamwork is bringing together diverse skills and capabilities- Teams that are cross functional and cross divisional spread best practice- We believe that the value of a team is greater than the sum of its parts. Team players are valued at SAI Global
- Everyone is going to like everyone in their team- You are only in one team. You may, from time to time, be in varying teams- The value of individuals is not recognised
51
SAI Global’s commitment to making work fulfilling…
2.2 Values – what do and don’t they mean?
Does Mean Does Not Mean
- You will be doing work that directly aligns with SAI Global’s Strategy, Purpose, Vision & Values- We will all have targets and Key Performance Indicators (KPI)- You will have a say in your career at SAI Global- Your performance will be recognised
- We can satisfy everyone’s needs all the time- That less stimulating work is always for somebody else- That work will never be frustrating- That fulfilment is achieved without effort
52
SAI Global’s employees are customer focussed…
2.2 Values – what do and don’t they mean?
Does Mean Does Not Mean
- We recognise that customers are our life blood- We are passionate about exceeding their expectations- We approach every day knowing that customers have the choice to buy elsewhere- We seek and act on feedback from our customers- We are aware that our future depends on how we serve our customers
- We should put service before profit- That other stakeholders aren’t important- We should offer services we are ill-equipped to deliver, just because a customer requests it- We should not be commercially focussed- We should trade our integrity to win a customer
53
SAI Global’s employees are people of integrity…
2.2 Values – what do and don’t they mean?
Does Mean Does Not Mean
- We demand honesty, integrity and an ethical approach to everything we do- We are not frightened to say “I don’t know”- We are not frightened to own up to a mistake- We value people who follow the “right” course of action as opposed to the “easy” course of action
- That commercially focussed decision making is discouraged- That we are not profit focussed- That we do not compete robustly- That results are unimportant
54
SAI Global’s employees are responsible...
2.2 Values – what do and don’t they mean?
Does Mean Does Not Mean
- We deliver what we promise- We own up to and learn from our mistakes- We make decisions that are in the long term interests of SAI Global- We don’t “pass the buck”
- We make commitments we cannot meet- We blame others- We look for excuses
55
SAI Global’s employees are forward thinking and innovative…
2.2 Values – what do and don’t they mean?
Does Mean Does Not Mean
- We anticipate our customers future needs- We know what our competitors are doing and respond positively- We question the status-quo- We constantly seek out new ideas- We value people who take on new challenges and offer new ideas
- We should ignore the lessons of the past- That we haven’t got it right- When things go wrong, somebody is always to blame- That we can concentrate on the future and ignore what needs to be done today
56
SAI Global’s employees are focussed on performance…
Does Mean Does Not Mean
- We value individual and team performance- We strive to work smarter- We maintain work/life balance- We are committed to achieving or exceeding our objectives- We don’t accept failure easily- We recognise those who go that extra mile- We do not tolerate mediocrity
- We are not compassionate- We encourage short term gain for long term pain- We are not quality focussed- We achieve at the expense of our colleagues
2.2 Values – what do and don’t they mean?
57
Organisational Behaviours Activity:
1. Break into teams and for 30 minutes brainstorm
- “What we currently do that aligns to the Purpose, Vision & Values and what doesn’t align?”- Suggest additions or deletions that we should make to what each element of the values “Does mean” and “Does not
mean”
2. Present your findings to the group
3. As a group discuss how we can change what needs to change
3. Next Steps
58
So what happens now?
Systems and processes to be reviewed and where required alignment made (e.g. Performance Appraisals, Sales strategies, Acquisition pipeline, Organizational policies)
Start living the values – be comfortable to raise concerns with someone if their behaviours do not align to the values
Support the Purpose & Vision – look for opportunities that will help SAI Global & in turn our stakeholders achieve our Purpose & Vision
3. Next Steps