Rubik Investor Presentation Sept2009


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Rubik updates investors on current businesses and progress in building the Bank-in-a-Box offering

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Rubik Investor Presentation Sept2009

  1. 1. Investor Presentation Rubik Financial Limited For personal use only September 2009 CONFIDENTIAL
  2. 2. Disclaimer • This document is a presentation of general background information about Rubik’s activities at end fy 09. • It is information in summary form and does not purport to be comprehensive. It is to be read in conjunction with the Preliminary Results filed with ASX on 31 August 2009. • It is not intended to be relied upon as advice to investors or potential investors and does not take into account the investment objectives, financial situation, tax position or needs of any particular person. These should be considered, with or without professional advice, when deciding if an investment is appropriate. • No representation or warranty, express or implied, is made as to the accuracy, reliability, reasonableness or completeness of the contents of this document. To the extent permitted by law, neither Rubik nor any of its directors, officers, employees or advisors nor any other person shall have any liability whatsoever for any errors or omissions or any loss, howsoever arising, directly or indirectly, from any use of this document or its contents. • Any forward looking statements, opinions and estimates contained in this document are based on assumptions and contingencies which are subject to change without notice. For personal use only CONFIDENTIAL 1
  3. 3. Rubik Overview • Rubik is focussed on acquiring best­of­breed technologies to develop an integrated holistic offering to financial institutions. The business model is built around acquiring the right capabilities, integrating them and, to the extent possible, leverage the common infrastructure with the objective of delivering superior returns • Key business segments and products offered are: – Phone banking ­ phone, mobile, kiosk banking – Internet Banking & Security ­ internet banking, Factor 2, identify management – Cards & Payments ­ credit card management, Direct Entry and Bpay solutions – CWX – collections, recoveries and delinquency management solutions – Bank in a Box – complete hosted suite of banking technology including the provision of the Temenos T24 core banking system • Product offering spans over 75 products across banking technology and corporate services. Our products are sold to 166 Australian Deposit Taking Institutions (ADIs), 15 New Zealand financial institutions and 31 other international financial institutions spread over 16 countries. Rubik also has 75 other customers spread across pharma, local government, utilities, Telco's etc where they have For personal use only requirements for card, payments, or collections capabilities. CONFIDENTIAL 2
  4. 4. Rubik Overview • We have acquired and integrated a number of software product businesses, created a stable team and operating structure, and manage products for over 250 Financial Institution clients. • Businesses purchased have strong product offerings that are providing sales to new and existing customers in Australia and various international markets. • Products have been re­engineered to be offered as hosted and ‘multi­tenanted’ offerings (i.e. multiple customers can use the one application with separate secure data and features) – see Appendix A for more information. • Temenos T24, the world’s leading core banking system, has been purchased, localized for the Australian market and integrated with our other product offerings – this forms our ‘Bank­in­a­Box’ offering. • We have signed our first two ‘Bank­in­a­Box’ customers – which will deliver us a reference site for other customers to view and proof that the model is robust, secure and cost effective. For personal use only CONFIDENTIAL 3
  5. 5. Where are we now? • As at 31 August 2009 – Share Price 9 cents Revenue – Market Cap $23M 10 • As at 30 June 2009 9 – Cash $21.6M 8 – Revenue $8.8M 7 – Loss ($4M) 6 – Normalised ($572K) 5 – Net Assets 17.3 cps 4 – Cash & Liquid 3 securities backing 9.2 cps 2 1 0 For personal use only 2007 2008 2009 Recurring Revenue Non‐recurring Revenue CONFIDENTIAL 4 Graph as at June 30 2009
  6. 6. Rubik’s Mission & Vision Rubik has the core functions necessary to deliver its vision of a ‘Bank­in­a­Box’ and will have the platform in production during 2009. Mission Rubik Financial will achieve compelling growth in shareholder value through exploitation of profitable niches within the financial services sector. Vision Deliver a flexible, low cost, hosted, “Bank­in­a­Box” technology platform to financial institutions. Bank­in­a­Box Flexible A suite of integrated systems for meeting banking system needs Low cost Decrease complexity & cost of technology to 30% of current costs For personal use only Hosted Provide a secure, highly available, compliant environment CONFIDENTIAL 5
  7. 7. Long term goal ­ “Frictionless Banking” • Deliver lower costs of products and services to consumers by decreasing the overall cost of delivery for Financial Institutions – Targeting a reduction of technology spend per Financial Institution by over 30% to reduce cost­to­income ratio by at least 10% – Manage entire technology needs of 75% of all financial institutions in Australia and New Zealand – ie. deliver scale benefits to the majority of Financial Institution market – Selectively develop products that have potential in the international market For personal use only CONFIDENTIAL 6
  8. 8. Our product offering today Rubik sells a range of competitive products that can be taken as in house applications or hosted by Rubik • Rubik has over 75 different products available and in use today Phone Internet Cards & Collections Banking Banking Payments • To assist customers understand our offer we have grouped in four product families CWX – 1st • This has meant moving products form Party IVR Online different acquisitions into new development Card Mgt banking Agency Mgt teams to build centres of excellence. VOIP • The development teams are still providing Legal recoveries compelling product offerings that can be SMS Banking Factor 2 SPX used in house by banks, but have also Mgt Console redesigned them to be able to be centrally Mobile hosted by Rubik Mercantile Banking 3rd Party Online Apps Bpay • Marked products already have a hosted Cash For personal use only Delinquency customer base Mgt Dispenser Already hosted by Rubik CONFIDENTIAL 7
  9. 9. Business unit revenue contribution • To assist understand the relative Bank‐in‐a‐Box Cards & Payments 0% contribution of Rubik business 12% units, revenues are shown • Collections shows only a half year of contribution • Bank­in­a­Box’ will only have material revenues post production as it is based on Collections 17% account use Phone & Mobile 47% Product line Market Share* Phone & Mobile 90% Internet Banking 20% Cards & Payments 1% Collections 5% Bank­in­a­Box 1% For personal use only * estimates based off market knowledge Internet Banking 24% Phone & Mobile Internet Banking Collections Cards & Payments Bank‐in‐a‐Box CONFIDENTIAL 8
  10. 10. Current Revenues • While 60% of revenues We have not are recurring, each 10 included any new year’s licence sales sales / licence 9 income in this deliver approx 20% recurring income streams estimate 8 in future years • The FY 10 estimate 7 shown here excludes Licence any new licence sales 6 made over fy 10 Forward Contracts 5 • Forward contracts are Maintenance $ Million contracted sales that 4 must be delivered Hosting before being recognised 3 as revenue Corporate Services • Management expects a 2 revenue run rate averaging over $1M per 1 For personal use only month in fy 2010 0 fy07 fy08 fy 09 est fy10 CONFIDENTIAL 9
  11. 11. Expense Management • Rubik has absorbed a number of 1,200 businesses and sought savings in: – Premises – by consolidating sites and seeking lower rental 1,000 rates General and Administration Expenses – Data and comms – by Data Communications removing old equipment, 800 Internal and centralising all servers to data centre Advertising and Promotion – Travel – by replacing visits 600 Travel Expenses with internet meetings, and more client visits per trip Occupancy Expenses • Labour is the largest cost and will 400 grow with success, we will focus Professional and on improving utilization rates – Consulting Fees that is, the amount of time staff Employment Expenses 200 are billed to customers vs. the total time we pay for. For personal use only ­ Feb­09 Mar­09 est Dec 09 CONFIDENTIAL 10
  12. 12. Product lines have International appeal We have 39 global financial institutions using products through resellers and regional offices – however our focus is on the Bank in Box value proposition Resellers For personal use only Offices CONFIDENTIAL 11
  13. 13. R&D investment • After considering potential core system acquisitions, we 16% 4,500 chose in favour of purchasing 14% 4,000 a license for Temenos T24 – a modern, world class core 12% 3,500 banking solution 3,000 • At end August we have 3 10% months more development 2,500 8% until the system is localised 2,000 and in production 6% 1,500 • We have spent $4.5M to date on licence and R&D and 4% 1,000 envisage a further $4M by 2% Dec 2009 500 • After this the licence 0% 0 payments will decrease and Sep‐08 Dec‐08 Mar‐09 Jun‐09 R&D rate will stabilise to a level around $1M per year. For personal use only RHS Operating Payments RHS Research & Development LHS % spend on R&D CONFIDENTIAL 12
  14. 14. Migrating to the Value proposition Rubik continues to offer the 4 product lines, but increasingly will be selling a single value proposition – the “Bank­in­a­Box” to Australian and NZ customers Customer Operations & Transactional Acquisition Processing Services Phone Internet Cards & Collections • CRM ­ ARC • Loan & • Payments ­ SPX Banking Banking Payments Customer • Internet ­ IB • Accounts – T24 • Security – F2, Administration • Online banking SMS, Token – T24 ­ IB • Sales • Fraud – IMTF • Phone Banking ­ Management ­ • Reporting ­ IVR CWX – 1st Sugar Mgt Console IVR • EFTPOS ­ CMS Party • Imaging and Online • Simulators / • ATM ­ CDM Card Mgt calculators Document banking • Host – T24 • Voice systems – management Agency Mgt – T24 • GL – T24 Swift Call VOIP • Branch systems ­ • Collections ­ Teller CWX Legal • Kiosk ­ SwiftCash • Workflow ­ recoveries WWF SMS Banking Factor 2 SPX Mgt Console Mobile Hosted & Managed Services Mercantile Banking • Secure, dual site setup with DRP and BCP in place 3rd Party • Standard Interfaces & shared development Online Apps Bpay • Managed hardware, network, software, and services Cash • Centralised business process for non­core activities For personal use only Delinquency Mgt Dispenser Already hosted by Rubik CONFIDENTIAL 13
  15. 15. The “core” is a major “friction” point • Our products give us Indicative costs of Bank IT an entry, proof of capability, and Phone Banking Regulatory  opportunity to sell 4% Reporting • But our products today 3% Hardware represent a small share of the bank cost = IT 12% revenue today • Core banking systems Website Hosting represent the majority 1% of expense for Bank IT • The “Bank­in­a­Box” revenue is bigger than Internet Banking just the core 12% Core system AML 64% 1% Operational CRM For personal use only 3% CONFIDENTIAL 14
  16. 16. The Bank­in­a­Box Value proposition The “Bank­in­a­Box” is an offering that matches the business needs of financial institutions, not a technology product driven offering • Customer Acquisition: Technologies that are Operations & Customer Transactional aimed at marketing to and acquiring new Acquisition Processing Services customers, such as customer relationship management (CRM) systems, marketing • CRM ­ ARC • Loan & • Payments ­ SPX • Internet ­ IB Customer • Accounts – T24 campaign management and digital marketing • Security – F2, Administration • Online banking technologies; SMS, Token – T24 ­ IB • Sales • Fraud – IMTF • Phone Banking ­ Management ­ • Reporting ­ IVR • Operations and Processing: Technologies Sugar Mgt Console • EFTPOS ­ CMS primarily related to meeting regulatory, • Simulators / • Imaging and • ATM ­ CDM calculators Document • Host – T24 accounting, compliance, reporting and • Voice systems – management – T24 • GL – T24 Swift Call management demands; • Branch systems ­ • Collections ­ Teller CWX • Transactional Services: Technologies that • Kiosk ­ SwiftCash • Workflow ­ WWF permit distribution of a bank's products and services via the various distribution channels demanded by customers, including the Hosted & Managed Services integration of systems with brokers and other • Secure, dual site setup with DRP and BCP in place referral services; and • Standard Interfaces & shared development • Managed hardware, network, software, and services • Centralised business process for non­core activities For personal use only • Hosted and Managed Services: The ability to provide a “turn­key and Hosted‟ service for financial institutions, removing technology and infrastructure complexity. CONFIDENTIAL 15
  17. 17. Why would Rubik be a preferred supplier? • Existing customer relationships that build • Our Core Banking offering T24 is recognised trust, demonstrate capability, and meet as a best­of­breed solution, as confirmed by supplier probity tests winning: • A public company with transparency and – Best Core Banking Product award of strong governance the European Banking Technology Awards 2007, 2008 • A common architecture that informs acquisition choices and decreases – Retail Banking Innovation award of The integration issues Banker Technology Awards 2007/2008 • A hosting platform that allows customers to – First Place in the 2007, 2008 IBS Sales choose to outsource IT or Business Process to League Table decrease costs and improve service • Experienced local team of developers with awareness of channels and Australian First place banking practices For personal use only CONFIDENTIAL 16
  18. 18. What’s in the Box? Other FI’s External WPac, CBA, NAB etc BPAY Parties CUSCAL AFIC/ASIC APRA Credit Union Banking Environment ATO Autrac Member Security Layer Direct Credits Veda Cheque Interface Layer Entry Debits T24 BPAY Accounts – Members – Rules Cards Processes ­ ATM/EFT POS FDI Transactions Interface Layer EFT Collections Security Layer Credit Union/Bank Head Office Rubik Channel Branches For personal use only Products IVR, Internet Banking, Mobile Banking, SMS Banking CONFIDENTIAL 17
  19. 19. Addressable Market – Bank­in­a­Box We sell the value proposition to Tier 2/3 customers in Australia and New Zealand, while offering tactical solutions for large financial institutions Declared* IT spend FY 2008 Our Offer Total: 4 $2.1B Tactical - Speed to market ‘Big 4’ $600M Whole / Tactical Total: 200+ Regional Banks $150M Whole of Business For personal use only Credit Unions * Noted as separate line in Annual Reports, not salaries or operations CONFIDENTIAL 18
  20. 20. Some examples of revenue potential • While it is hard to 100% generalise about the revenue allocation 90% between banking systems (as it depends 80% greatly on age, 70% functionality and perception of products) 60% Other Rubik generally only has revenues around 5% of 50% Core the IT spend of its clients. 40% Cards • The sizes on the clients 30% on the left varies from Collection small to very large but 20% provides a feel for the Internet scale of the revenue 10% Phone opportunity for Rubik 0% Client 1 ‐ Client 2 ‐ Client 3 ‐ Client 4 ‐ For personal use only $150K  $500K  $3M  $50M  annual  annual  annual  annual  spend spend spend spend CONFIDENTIAL 19
  21. 21. Breakeven point ­ Bank­in­a­Box • The Bank­in­a­Box offering is highly leveraged to scale. Our initial build is for 2M accounts under management. To put into context, this would be 2­4 large Credit Unions or 15­20 comparable to Maleny Credit Union • Over 70% of all ADIs in Australia (representing over 4.5M customers excluding ‘Big 4’ ) have a core banking decision to make by 2012. Thus there should be at least 90 potential sales – even if only 25% make a decision to change system that should allow us 20 potential customers by 2013. • Rubik has built a team to deliver and maintain the Bank­in­a­Box capability, this does not directly scale with increased account numbers. T24 has installations with over 12M accounts. APCA Statistics – 2008 Payment Accounts 33.7M For personal use only Debit cards 21.2M Credit cards 20.3M Income from accts CONFIDENTIAL 20 Cost per account
  22. 22. Strategy Timeline 1/11/2009 First Bank In Box live Corporate setup Initial Acquisitions Integrate products Cards & Payments 1/01/2008 1/01/2009 1/01/2010 1/01/2011 1/01/2012 27/09/2007 6/01/2012 24/11/2007 - 30/09/2008 15/01/2009 - 1/11/2009 1/12/2009 - 30/06/2011 Core selection Core Localisation Exploit BinB Horizon 1 • We now have a range of products that provide revenues and customer contact – these will build and grow in their respective markets • We will selectively use resellers in international markets to gain more revenue from the investment in these products. Horizon 2 • Our Bank­in­a­Box offering will be fully available by the end of this year. • A core banking system usually takes an organisation 12­18 months to choose. Implementing a core banking system averages 14 months, with implementations ranging from 6­12 months to many years. • Most financial institutions need to consider extending current core systems or replacing core systems by 2012 when most current contracts expire. For personal use only Horizon 3 • As more and more customers take up our hosted Bank­in­a­Box or product based offerings, we will then turn our focus to exploiting our Cards and Payments solutions CONFIDENTIAL 21
  23. 23. Outlook 2010 • Rubik has seen an acceleration in the pace of financial institution mergers since the beginning of the Global Financial Crisis. • Mergers do slow or delay major core replacement programs as the processes are undertaken, however long tem provide Rubik with larger customers with more sophisticated needs. • At an industry level the Authorised Deposit Taking Institution market is strong with significant appetite for improvements to technology • Even though Rubik is comfortable that business is stable or growing, we have taken a prudent approach by increasing provisions as payments have slowed, and impaired assets effected by the decrease in activity. • We are having success at winning new customers, selling more to existing customers and developing or acquiring additional products to cross sell • We have tightened cost controls in premises, communications and travel, while focussing on gaining higher staff productivity • Over 2010 as our ‘Bank­in­a­Box’ capability enters production we will see decreasing contractor costs and increasing recurring revenue streams • Management expects a slight positive operating cashflow for 2010 and positive earnings For personal use only • Our medium term success will be dependant on securing further sales of our ‘Bank­in­a­Box’ CONFIDENTIAL 22
  24. 24. Potential for re­rating • Rubik is currently valued at cash backing. US Fin Tech Symbol Market Cap P/E Jack Henry & Associates... JKHY 1.96B 19.19 • There is no premium for current product offerings, customer base or IP of existing S1 Corporation SONE 342.96M 14.54 businesses Metavante Technologies... MV 3.81B 22.68 UK Fin Tech • There is no premium for the potential Misys plc MSY 1.01B 11.33 revenue upside from the successful implementation and exploitation of the Gresham Computing plc GHT 21.54M 714.91 “Bank­in­a­Box” strategy Intelligent Environments... IEN 16.68M 13.77 Microgen plc MCGN 66.62M 15.48 • There is a substantial P/E multiple available Australian IT companies when Rubik is rerated based off earnings rather than cash SAI Global Limited SAI 529.05M 19.64 SMS Management & Tech... SMX 289.91M 12.28 UXC Limited UXC 183.99M 13.33 Australian Fin Tech companies Rubik Financial Limited RFL 22.55M ‐ Bravura Solutions... BVA 63.87M 10.74 GBST Holdings Limited GBT 40.47M 11.6 Tasmanian Perpetual... TPX 63.34M 10.06 For personal use only Razor Risk Technologies... RZR 10.79M 8.02 Customers Limited CUS 357.34M 78.7 CONFIDENTIAL 23
  25. 25. Rubik Financial Ltd ABN 51 071 707 232 End •8/45 Market St, Sydney •1/1 Eden Park Drive, Macquarie Park, Sydney •47 Wickham St, East Perth •51 Goldhill Plaza Singapore 308900 PO Box 4808 Sydney NSW 2001 For personal use only Phone: +61 2 9488 4000 Fax: +61 2 9449 1116
  26. 26. Board The Board is an experienced team with knowledge in financial services and acquisition Craig Coleman Andrew Moffat Ian Hunter Non­Executive Non­Executive Non­Executive Chairman Director Director • His current appointments include • Principal of corporate advisory firm • A founding and ongoing non­ Senior Advisor & Director of the Wyllie Cowoso Capital executive director of E*TRADE Group Limited, Chairman of boutique • Chairman of Pacific Star Network Australia Limited (wholly owned fund manager Viburnum Funds Pty Limited and a Non­Executive Director subsidiary of ANZ Bank) Ltd, Non­ Executive Director of the of Infomedia Ltd • Non­executive Director of Ironbark Bell Financial Group and Non­ Capital Limited, a listed funds • Formerly a Director of Equity Capital Executive Director of Amadeus management company Markets & Advisory for BNP Paribas Energy Limited and Amcom Telecom Equities (Australia) where he took • Over 25 years experience in Banking Limited. principal responsibility for mergers including Director and Exec VP of • Former Managing Director, and and acquisition advisory services and Bankers Trust Australia former Non­Executive Director, of a range of equity capital raising • Chairman of Audit Committee Home Building Society Ltd mandates • Previously held a number of senior executive positions and directorships with ANZ Banking Group, including For personal use only Managing Director Banking Products, Managing Director Wealth Management and Non­Executive Director of E*TRADE Australia Limited CONFIDENTIAL 25
  27. 27. Management Team The management team has experience in managing financial institutions and the technology arms of these companies. Brent Jackson Stephen Kunkler Steve Warren Chief Executive Chief Operating Sales Director Officer Officer • Appointed in November 2008 • Founding CEO September 2007 • Founding COO September 2007 • Over 20 years’ experience working in • Former General Manager of Lending • Former General Manager of Direct senior management and CEO Systems for Sandstone Technology Banking at Sandstone Technology positions for companies such as and former NSW State Manager of and former manager of Finance and Landmark, Shell Employees, RTA Staff Members Equity Bank Web Operations and Manager of and CAPE Credit Union • Director of e­Commerce Information Systems at AMP Development at ANZ, played a key • Whilst at Sandstone, was responsible role in initiating and executing the for directing and overseeing the Nick Moser ANZ E*Trade joint venture transition towards reusable systems development, development of strict Chief Financial • ANZ Global Head of Non­Mortgage Lending between 1998 and 1999, QA processes and formulation of a Officer contributed to the bank achieving pricing strategy to deliver stronger increased market share whilst recurring revenue lowering ANZ’s cost­to­income ratio • Roles at AMP included integration • Appointed in December 2008 for small business lending with GIO’s systems during the 2000 • Over 20 years’ experience in the For personal use only • Experienced in the acquisition and merger, development and day­to­ financial services and technology divestment of businesses day responsibility of AMP’s website sectors, in CFO, Financial Controller and managing the development and Company Secretary positions and implementation of various with companies such as Amadeus IT reporting systems within AMP Pacific, Hypertec Research and Grundy CONFIDENTIAL 26