Investors Presentation MPS Limited December 2012
Agenda § Business Overview § Focus on Specific Business Units § Growth Strategy and Related Developments § Key Developments Post-Acquisition by ADI § Financial Annexure www. adi-mps. com 2
Business Overview www. adi-mps. com 3
Over the 42 years of its dominant presence, MPS has evolved to be a trusted partner for publishers at every stage of the publishing process. Our service portfolio includes print and digital publishing services, transformation of content for usability across multiple platforms, custom and plug-n-play technology platforms for different stages of the publishing process, engaging and interactive media products, and customer support services for educational, academic, trade, and directory publishers. www. adi-mps. com 4
Integrated Service Portfolio MPS Journal Publishing Services - end-to-end, print and digital publishing services for STM and academic publishers. MPS 360 Customer Services - customer support and fulfillment services for print and online publishing products MPS Technologies - develops and maintains custom and plug-n-play technology platforms for all stages of the publishing MPS Book Publishing Services - prepress publishing services including editorial services, typesetting, project management, and indexing among others MPS Digital Services - skilled and dedicated data conversion team for books, journals, directories, and a wide variety of other applications. MPS Engaging and Interactive Media Services - focused on powering engaging and interactive learning products for educational publishers. MPS Database and Directory Services - innovative advertisement design and production services via print, online, and mobile platforms for database and directory publishers. www. adi-mps. com 5
Locations Sales team Portland office – Books, sales & marketing Sales team 8 production facilities Delhi office – Books Noida (corporate office) – Sales & marketing Gurgaon office – Fulfillment, Technology Dehradun office – Books Bangalore office – Ad Studio, Digital, Journals Chennai (2 offices) – Books, Digital, Journals, LNMS On-shore office for sales and client management Sales force in US and UK ~ 2500 people www. adi-mps. com 6
Driven seamlessly by Digi. Core has enabled the integration of the MPS service portfolio on the cloud and provides publishers the power of end-to-end, digital first publishing. • Online smart editing with underlying XML • On-the-fly, automated page proof • Rich editorial functionalities • Customized templates for layout • Intuitive context-based editing • Proof, POD, and e. Book PDF generation • • • Smart navigation • Advanced black-box composition engines • Built-in error reporting Table and math editing Integration with third-party databases • • EPUB and MOBI output • • • Round-trip XML to Word XSL transformation engine • • Integrated validation and QC tools Integration with publisher’s CMS & third-party systems • Distribution to retailers & online platforms such as Amazon, i. Tunes, and Kobo • Content Store – e. Book delivery and distribution platform by MPS Publisher XML / Schema output Feed for mobile apps • • • Print to digital transformation Adding Interactivity Audio/video editing, closed captioning Flash/HTML 5 output support Native, Web, and hybrid apps www. adi-mps. com 7
Select Customers www. adi-mps. com 8
Key Facts and Figures Journals and Magazines 10 million pages in the past decade Award-Winning Products • ESU President’s Award 2010 for Macmillan Education’s Global e. Workbook • 2008 Webbys - Best Website for Nature. com Digital Conversion 8 million pages a year Certifications • ISO 9001: 2008 • ISO/IEC 27001: 2005 • PCI-DSS (credit cards) Books and Major Reference Works 1. 2 million pages a year 2500~ employees across Delhi, Bengaluru, Chennai, Gurgaon, Noida and Dehradun in India, and Portland, Oregon in North America Customer Service • 400, 000 subscriptions • 250, 000 customer service inquiries • 120, 000 site license and consortia orders 758 Ph. Ds, MBAs/PGDMs, and science/engineering degrees www. adi-mps. com 9
Strategic Business Units (SBUs) www. adi-mps. com 10
Journal Publishing Services Ultrafast production with accelerated delivery for print, Web, mobile devices § § Offers complete Journal production management » Work closely with stakeholders to ensure that issues are published on schedule and with highest accuracy » Real-time status updates through an online dashboard Vast pool of experienced editorial resources across multiple disciplines XML-based composition using automated and efficient workflows with simultaneous print and Web deliverables Delivery on mobile devices including i. Pad based on both Adobe DPS and native apps that enhances multimedia user experience. ü Largest contributor to MPS revenue ü 800+ people across three production facilities – Bangalore, Chennai, and Dehradun www. adi-mps. com 11
MPS 360 Degree Customer Services Leading the drive toward customer engagement for publishers § § § § § End-to-end customer services Flexibility of operating with any customer service operating system Robust technical support with dedicated teams for customization and development Reduced operating costs through multiple engagement models Effective and accurate data migration and system integration SLA & KPI-driven delivery models ensuring operational excellence Dedicated quality assurance and compliance team led by Lean Six-Sigma qualified professionals Data security compliance through payment card industry data security standards Market insights through data analytics and reporting services that help you make the right decisions ü Only fulfillment service provider in India www. adi-mps. com 12
MPS Technologies Custom and Plug-n-Play Technology Platforms for Publishers § Key technology platforms offered through Software as a Service (Saa. S) model include: ü Content. Store: e. Book delivery and distribution platform ü MPS Insight: content usage reports and other content usage intelligence that empower the publisher sales force ü MPS Trak: Production tracking system for books, journals, and reference works ü MPS Manuscripts: Manuscript submission, technical screening, and peer review platform ü Scholar. Stor: Content delivery and distribution platform for books, journals, and reference works • Custom application services account for the majority of this SBUs revenues. These services include building and maintaining custom applications for publishers and such revenue recurs for periods of 3 -5 years. ü Talented pool of 85+ technical resources www. adi-mps. com 13
Book Publishing Services End-to-end digital first workflows for content production and distribution § § § Experienced offshore and onshore project managers for end-to-end project management of book production Editorial resources for multiple disciplines Expertise with XML based workflows Content transformation and conversion services including EPUB 3 and HTML 5 Animation and interactive content development ü 650+ people across Chennai, Delhi, and Dehradun ü Second largest contributor to MPS revenue www. adi-mps. com 14
Digital Services Web publishing, e. Books, or digital archives – content for digital consumer § § Convert from any input to multiple output formats High degree of automation to reduce manual intervention. Automation tools: » XML Automation Tool that auto updates all elements and attributes of consolidated XML files from client specification. » QC Tool that captures inconsistencies in XML and PDF files, auto zips only error-free files, and increases efficiency. » Legacy Digitization Tool that automatically removes duplication and digitizes legacy content » Document Conversion Tool that auto converts MS Word/Excel files into XML format. § § § Technical competence to handle complex custom projects Future-proofing content by delivering diverse formats at the same time Large capacity and quick turnaround ü Third largest contributor to MPS revenue ü 350+ employees across Chennai and Bangalore www. adi-mps. com 15
Learning and New Media Services Powering engaging and interactive learning products for educational publishers Interactive Learning § Create innovative and interactive learning material using instructional design models for educational publishers. Content Transformation § Redesign traditional print content into a new multimedia format with MPS Media. Suite platform for secure and ready distribution of flipbooks over desktops, mobiles, smartphones, and tablets. Interactive Whiteboard § Provide end-to-end, device neutral, and easy-to-update interactive whiteboard application and content solutions. Learning Infrastructure § Offer a wide range of consultancy services for learning management systems (LMS) and learning content management systems. App Development § Native, Web, and hybrid mobile apps for cross-platform deployment www. adi-mps. com 16
Database and Directory Services Design and composition services for database and directory publishers § § § § Yellow Pages - Integrated solutions for data management, directory management, and creative & content delivery services Online Storefront - Comprehensive creative design package for product display Stock Images - Customized image editing services Websites - Customized Web solutions for e-business needs Newspapers - Professional designing services for your newspaper ads Comics - High impact creative services for cartoons & comics Smartphones and Tablets - Ad designing services for mobile devices including smartphones and tablets Large pool of creative professionals with rich experience in serving global media and publishing clients ü Delivered over 0. 5 million ads/year www. adi-mps. com 17
Growth Strategy and Related Developments www. adi-mps. com 18
Growth Strategy and Related Developments § Growth strategy driven through an integrated approach between sales, marketing, operations, and technology across different SBUs § Organic and inorganic growth through existing customers in newer areas and new customers in traditional areas of business and newer areas. § Significant growth to arrive from the US market. § MPS global sales and marketing engine to be driven from MPS Portland, Oregon facility through the introduction of key marketing and strategy management personnel in 2013. § Marketing Mission – Relentless Pursuit of Customer Delight. Intent behind this mission is to differentiate MPS in a crowded market where growth often comes at the cost of a competitor. § Strong technology focus will be the enabler behind this focused and determined agenda of delighting the customer. § Technology upgrades have enabled entry into newer markets that were earlier dominated by two/three players. An aggressive commercial model is allowing MPS significant entry into these markets. www. adi-mps. com 19
Key Financial Developments after Acquisition by ADI www. adi-mps. com 20
MPS struggling with profitability before ADI took over Income Statement Particulars (Rs mn) Operating income Operating Income Growth EBITDA Margin (on total income) PAT Margin EPS (Rs per share) FY 07 FY 08 FY 09 FY 10 (12 Months) 2, 177. 2 2, 231. 1 2. 5% 272. 8 12. 0% 138. 6 6. 1% 8. 2 289. 8 12. 9% 125. 2 5. 6% 7. 4 1, 635. 4 -26. 7% 1, 274. 2 -22. 1% 149. 0 (24. 8) 8. 9% -1. 8% 47. 2 (88. 1) 2. 8% -6. 5% 2. 8 (5. 2) § Lower profitability in FY 09 due to: − Recessionary conditions in major markets − Strong competition, leading to higher discounts, pricing pressures − Strategic investments made in new technologies and process which increased short term costs − Demerger of the domestic publishing unit in FY 08 § Loss in FY 10 due to: − − Continuing commoditization of the core journals and books services markets Strong competition amidst pricing pressure Strengthening of the Indian Rupee versus the US dollar Higher debtors provisioning due to bankruptcy filing by a client in the US www. adi-mps. com 21
ADI gets operations back on track in FY 12 § Overhauls sales team in the US Ø Reduces number of sales & marketing people, leading to lower selling cost § Cuts marketing arrangement with HPI Ø Leads to saving of Rs 30 -40 mn per annum § Reduces offices in India § Reduction in manpower in businesses with below par profitability Ø Books from 697 as on 31 Mar’ 11 to 651 as on 31 Mar’ 12 Ø Ad Studio from 251 as on 31 Mar’ 11 to 175 as on 31 Mar’ 12 § Shifts some roles in the books division to new Dehradun facility Ø Cost is 30 -40% lower in Dehradun, and with lower attrition risk Opex as % of revenues comes down in FY 12 % of sales Operating Expenditure Staff Costs Other Expenditure EBITDA FY 09 FY 10 FY 12 93. 2% 57. 3% 33. 9% 8. 9% 109. 0% 65. 9% 26. 1% -1. 8% 87. 9% 55. 9% 22. 7% 15. 1% www. adi-mps. com 22
Profitability improves further in 1 HFY 13 Income Statement FY 12 (15 Months) 1, 910. 1 1 HFY 12 1 H FY 13 772. 6 803. 8 4% 1, 977. 3 793. 6 823. 9 EBITDA Margin (on total income) 299. 2 15. 1% 104. 3 13. 1% 205. 9 25. 0% PAT Margin 108. 7 5. 5% 42. 5 5. 4% 149. 3 18. 1% Particulars (Rs mn) Operating income Operating Income Growth Total Income EBITDA Operating margin now a healthy 25% in 1 HFY 13 § EBITDA margin improves to 15. 1% in FY 12. In 1 HFY 13, EBITDA margin has improved to 25%. Barring unforeseen circumstances the Company expects to sustain the EBIDTA margins for the second half of the year § PAT of Rs 108. 7 mn in FY 12 as against loss of Rs 88 mn in the previous fiscal; PAT margin of 5. 5%. PAT margin improves to over 18% in 1 HFY 13. Tax rate would go up in the second half of FY 13 § MPS will end FY 13 with a strong balance sheet, as a zero debt company with net cash reserves www. adi-mps. com 23
Financial Annexure www. adi-mps. com 24
Income Statement - Annual (Rs mn) Months Dec-07* 12 Dec-08* 12 Dec-09* 12 Dec-10 12 Mar-12 15 Net Sales 2, 177. 2 2, 231. 1 1, 635. 4 1, 274. 2 1, 910. 1 Other Income 98. 7 23. 7 37. 1 90. 1 67. 2 Total Income 2, 276. 0 2, 254. 8 1, 672. 6 1, 364. 3 1, 977. 3 (55. 3) 54. 9 13. 3 9. 7 20. 0 Direct Cost / Raw Materials Consumed 192. 6 100. 4 18. 3 206. 0 155. 9 Staff Costs 951. 7 972. 4 937. 1 840. 3 1, 068. 7 Other Expenditure 914. 1 837. 4 554. 9 333. 1 433. 5 Total Expenses 2, 003. 2 1, 965. 0 1, 523. 6 1, 389. 1 1, 678. 1 272. 8 289. 8 149. 0 (24. 8) 299. 2 Depreciation & Amortisation 97. 0 88. 9 90. 8 66. 7 106. 8 EBIT 175. 8 200. 9 58. 1 (91. 6) 192. 4 Interest 5. 0 2. 5 1. 6 5. 3 13. 0 Profit before tax & exceptional items 170. 8 198. 4 56. 5 (96. 9) 179. 4 Expenses Decrease / (Increase) in Work in Progress EBITDA Mark to market forward contracts Profit before tax Tax Profit after tax - 33. 9 170. 8 198. 4 56. 5 (96. 9) 145. 6 32. 2 73. 2 9. 3 0. 4 37. 7 138. 6 125. 2 47. 2 (88. 0) 108. 8 *consolidated numbers. In FY 10, MPS Technologies Ltd. , MPS Content Services Inc. and its wholly owned subsidiary MPS Content Services (India) Pvt. Ltd were merged with the parent company, MPS Limited, with effect from 31 st December 2010. Domestic publishing business was de-merged in FY 09. hence FY 09 figures are not strictly comparable with FY 08 and FY 07 www. adi-mps. com 25
Balance Sheet (Rs mn) 31 -Dec-07* 31 -Dec-08* 31 -Dec-09* 31 -Dec-10 31 -Mar-12 Source of Funds Share Capital Reserves Total Shareholder Funds Total Debt Deferred tax liability Minority Interest Total Liabilities 168. 2 1, 822. 5 1, 990. 7 91. 4 -3. 7 4. 1 2, 082. 5 168. 2 658. 8 827. 0 30. 7 13. 6 - 871. 3 168. 2 686. 3 854. 5 42. 0 10. 5 - 907. 0 168. 2 504. 3 672. 6 108. 6 1. 8 - 783. 0 168. 2 534. 9 703. 1 58. 3 0. 9 - 762. 3 Application of Funds Gross Block Less: Depreciation Add: CWIP Net Block Goodwill Investments 936. 9 508. 5 3. 9 432. 2 522. 0 124. 4 784. 8 427. 8 19. 4 376. 3 133. 6 - 810. 8 451. 6 8. 0 367. 2 132. 7 - 871. 5 515. 0 13. 8 370. 2 - 807. 2 542. 2 - 265. 0 - 122. 0 Inventories Sundry Debtors Cash and Bank Loans and Advances Total Current Assets Current Liabilities Provisions Total Current Liabilities Net Current Assets 435. 8 611. 5 393. 3 244. 8 1, 685. 5 589. 7 91. 8 681. 5 1, 003. 9 135. 5 360. 9 211. 3 164. 0 871. 7 477. 4 32. 9 510. 3 361. 4 122. 2 350. 1 227. 2 210. 4 909. 9 461. 0 41. 7 502. 8 407. 2 112. 5 290. 5 257. 4 227. 5 887. 8 467. 4 7. 7 475. 1 412. 7 92. 5 242. 4 91. 3 227. 1 653. 3 200. 8 77. 2 278. 0 375. 3 2, 082. 5 871. 3 907. 0 783. 0 762. 3 Total Assets *consolidated numbers. In FY 10, MPS Technologies Ltd. , MPS Content Services Inc. and its wholly owned subsidiary MPS Content Services (India) Pvt. Ltd were merged with the parent company, MPS Limited, with effect from 31 st December 2010. www. adi-mps. com 26
Interim Quarterly P&L (Rs mn) Net Sales Other Income Total Income Jul-Sep'12 417. 3 10. 1 427. 4 Jul-Sep'11 396. 9 5. 4 402. 3 % change 5. 1 87. 0 6. 2 Apr-Jun'12 386. 5 10. 0 396. 5 Apr-Jun'11 % change 375. 7 2. 9 15. 6 (35. 9) 391. 3 1. 3 -2. 8 -2 40. 0 -0. 2 6. 4 (103. 1) 1 1. 4 (28. 6) 0. 7 1. 4 (50. 0) Expenses Decrease / (Increase) in Work in Progress Direct Cost / Raw Materials Consumed Staff Costs Other Expenditure Total Expenses 198. 4 108. 7 305. 3 219. 8 (9. 7) 120. 1 (9. 5) 339. 3 (10. 0) 201. 1 111. 1 312. 7 222. 9 (9. 8) 119. 3 (6. 9) 350. 0 (10. 7) EBITDA Depreciation & Amortisation EBIT Interest Profit before tax Tax Deferred Tax 122. 1 17. 3 104. 8 1. 5 103. 3 0. 7 - 63. 0 21. 1 41. 9 2. 1 39. 8 12. 3 - 83. 8 16. 5 67. 3 2. 0 65. 3 18. 6 - 41. 3 20. 1 21. 2 4. 2 17. 0 2. 0 - Profit after tax 102. 6 27. 5 93. 8 (18. 0) 150. 1 (28. 6) 159. 5 (94. 3) 273. 1 www. adi-mps. com 46. 7 15. 0 102. 9 (17. 9) 217. 5 (52. 4) 284. 1 830. 0 211. 3 27
Contact Us For any Investor Relations queries, please contact Sunit Malhotra CFO C-35, Sector 62 Noida - 201 307 Pooja Dokania Associate Vice President Four-S Services Private Limited 101, Nirman Kendra, Mahalakshmi Mumbai – 400 011 Email: sunit. malhotra@adi-mps. com Phone: +91 120 402 1252 Email: pooja. dokania@four-s. com Phone: +91 992 006 3991 www. adi-mps. com 28
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