Analyst Presentation - Aptech LTD Q3FY13

APTECH LIMITED
Investor Update Quarter Ending 31st Dec 2012
Safe Harbor Statement
Certain statements in this presentation concerning our future growth prospects are forward looking statements, which involve a number of risks and uncertainties that could cause actual results to differ materially from those in such forwardlooking statements. The risks and uncertainties relating to these statements include, but are not limited to, risks and uncertainties regarding fluctuations in earnings, our ability to manage growth, intense competition in vocational training space including those factors which may affect our market share, network across the world, our ability to attract and retain highly skilled professionals, time and cost overruns on government contracts, our ability to manage our international marketing & sales operations, slowdown in demand for the end-use sectors, liability for damages on our service contracts & placement guarantees, the success of the companies in which the Company has made strategic investments, withdrawal of governmental fiscal incentives, political instability, legal restrictions on acquiring companies outside India, and unauthorized use of our intellectual property and general economic conditions affecting our industry. The Company may, from time to time, make additional written and oral forwardlooking statements and our reports to shareholders. The company does not undertake to update any forwardlooking statement that may be made from time forward to time by or on behalf of the company.
All financial numbers in ` million
www.aptech-worldwide.com
MD & CEOs Message

Dear Friends, As conveyed in my previous messages, our focus recently has been on boosting our booking levels in the retail business. Despite facing a handicap due to freeze on new degree enrollments in MAAC, we have again been successful in delivering a small growth in retail booking in Q3. While we have been successful in mitigating the impact of IGNOUs decision to temporarily halt alliance courses on the enrollments done till Q2 FY13, work on ensuring availability of a degree product (a key part of the product mix) for MAAC is still under progress. We have also been successful in generating major traction for our brand franchise in the domestic market by signing up 21 new franchisees. While the core retail business in International remains a concern area, especially in Vietnam, the volumes in International Retail projects are on an upswing. In Vietnam, the good news is that we have at least been able to arrest the trend of decline in booking in December. On the profitability front, now Aptech English has turned in its 1st EBITDA positive quarter in the domestic market. Aptech Testing continued being the engine of growth for the Enterprise Business group. In the next quarter, we will be delivering the next CMAT, which will be the largest implementation of its kind for Aptech in its history. With many state governments now accepting CMAT scores for admissions to local management institutions, this contract will continue to deliver growth for Aptech Testing in the near future. At the end, I wish that this new year brings many good tidings for you and your family, and is as successful for you as I believe it will be for Aptech. 22nd
Ninad Karpe January 2013
Summary
Operating income for Q3 FY13 was `367.38 million as against `397.84 million in Q3 FY12 (7.7% de-growth) Operating EBITDA for the quarter was `52.11 million, growth of 1.2% over last year
Profit Before Tax (before exceptional items) of `68.44 million vs. `59.60 million in Q3 FY12, represents growth of 14.8% on a y-o-y basis Recorded PAT of `60.38 million in comparison with `59.38 million in Q3 FY12, growth of 1.7% in spite of higher taxes
Consolidated Financials
Q3 FY2013
Consolidated Results
For Period Q3 FY13 Q2 FY13 % Variation (PQ) -18.8% -14.6% -37.4% 110.8% -19.5% 8.2% Q3 FY12 % Variation (PY) -7.7% -9.0% 1.2% 12.8% 3.1% -14.5%
Operating Income
Less: Operating Expenses Operating EBITDA Add: Other + Dividend Income Less: Interest Expense Less: Depreciation PBT Less: Tax PAT (before minority interest)
367.38
315.26 52.11 38.95 0.33 22.30 68.44 7.73 60.71
452.16
368.96 83.21 18.48 0.41 20.61 80.66 20.9 59.76
397.84
346.38 51.48 34.54 0.32 26.07
-15.2%
-63.0% 1.6% -52.2% 1.4%
59.60
59.60 (0.22) 59.38
14.8%
1.9% -59.1% 1.7%
Add: Minority Interest

PAT (after minority interest)
(0.35)
60.38
(0.23)
59.55
Key Notes & Segment Results

The Board of Directors have recommended an interim dividend of ` 1.50 per equity share (15 % on Face value of Rs. 10/-) for the financial year 2012-13
Segment (Quarterly) Operating Income Operating EBITDA Operating EBIT (before exceptional items) Exceptional Items Less: Interest Expense Un-allocable Income Profit Before Tax Capital Employed*
Retail 300.04 82.46 68.90 -
Non-retail 67.35 20.07 18.28 -
Un-allocable (50.43) (57.38) -
Total 367.38 52.11 29.80 0.33 38.95 68.44
149.06
52.05
3,196.59
3,397.70
* Un-allocable includes Cash & Cash Equivalents of ` 1,110.00 million and Investments (China & Poland) of ` 1107.84 million
Retail Revenue Analysis

Q3 FY13 Retail Revenue
2% 2% 1% 17% 4% 6% 6% 6% 10% 56% 9% 11%
Q3 FY12 Retail Revenue

1% 2%
0%
66%
Royalty income declines by 22.7% mainly due to change in MAAC revenue recognition policy University fees drop by 65.1% on account of freeze on MAAC IGNOU courses and other University issues Upswing of 44.6% in International projects income due to higher number of batches in ITEC
63.7% jump in sign-up fee with 21 new centers signed in domestic market vs. 9 in Q3 FY12 and 20.9% jump in renewal fee vis--vis Q3 FY12 Jump in reimbursible marketing income lead to higher contribution from Domestic Retail Project income in Q3 FY13
Expense Analysis
Operational Expenses Employment cost Q3 FY13 94.17 Q2 FY13 90.23 Q3 FY12 95.11
Training and Education expenses

Marketing and Advertising expenses Provision for Doubtful Debts Administration expenses Total
109.15
21.24 22.09 68.62 315.26
129.57
48.96 29.10 71.10 368.96
134.94
17.81 32.87 65.65 346.38
Reimbursible marketing expenses (by Arena & MAAC franchisees) of `2.8 million vs. `12.5 million in Q2 FY13 and `1.1 million in Q3 FY12 Increase of `6.6 million in leave encashment provisions is only partially offset by `1.4 million reduction in salary costs and `0.5 million decline in gratuity provisions in Q3 FY13 vs. Q2 FY13
Execution of CMAT project overall contributed `19.9 million to costs in Q2 FY13, which are largely accounted under Training & Education expenses Provision for doubtful debts in Q3 FY13 include `8.1 million provision from MAAC vs. `15.9 million MAAC provision in Q2 FY13 and `27.8 million in Q3 FY12
Key Balance Sheet Information

31st December 2012 Share Capital Reserves & Surplus Debt (incl. Commercial Paper) Goodwill Net Fixed Assets Cash & Cash Equivalent Debtors (Net of provisions) 489.23 2,908.47 661.85 366.64 1,110.00 219.91 30th September 2012 489.23 2,936.73 661.85 365.94 1,044.95 225.12
Decline in Reserves & Surplus is on account of payout of dividend from the profit for year till date period
10
BRAND-WISE PERFORMANCE
11
Revenue By Brand
DOMESTIC RETAIL 150 100 60 60 50 0 IT Training Arena Animation Aptech Aviation 27 31 12 10 1 198 239 137 INTERNATIONAL RETAIL 70 60 50 40 30 20 10 0 62 52 39 32 1 5 IT Training Arena Animation Aptech English 102 89
97
1
MAAC
0.1 Others
Aptech English
ENTERPRISE
50 40
30 20 10 0
44
40 21 24
69
67
0 Aptech Testing
2 2 Projects
Training Learning Solutions Services
MAAC revenue declined by 26.9% mainly due to accounting policy change and freeze on new IGNOU enrollments Franchising of Own Centers and decline in Logistics income in IT Training contributed `2.6 million and `1.7 million to the drop in revenue vis--vis Q3 FY12 Drop in Arena royalty income compensated by additional `2.0 million sign-up income vis--vis Q3 FY12 Jump of `15.9 million in revenue from International projects contributed to growth of International retail in Q3 FY13
Q3 FY13 Q3 FY12
* IT Training = Aptech Computer Education (Aptech Computer) + Aptech Hardware & Networking (Aptech Networking)
12
Operating EBITDA By Brand

DOMESTIC RETAIL 40.00 30.00 20.00 10.00 0.00 (10.00) ENTERPRISE -1 19 17 35 37 53 51 INTERNATIONAL RETAIL 30.00 25.00 20.00 15.00 10.00 5.00 0.00
25
18 11 13
29
41
1 2
0.1
-2
-1
-3
0.8
IT Training
Arena Animation
Aptech Aviation
Aptech English
MAAC
20.00
15.00 10.00
17
15
20
16
Provision for doubtful debts of `3.2 million each in IT Training and Arena contributed to decline in EBITDA Higher sign-up fees and lower provisions for doubtful debts enable MAAC EBITDA to grow by 11.7% Y-o-Y
-0.3
5.00
0.00 (5.00)
-0.1
0.4 1
0.2
Aptech English crosses break-even level for the 1st time in the domestic market International Retail EBITDA impacted by change in revenue mix and higher provisions for doubtful debts
Q3 FY13 Q3 FY12
Aptech Training Learning Projects Testing Solutions Services
13
% Operating EBITDA By Brand

DOMESTIC RETAIL 80% 60% 40% 20% 0% -20% -40% -60% -80% 58% 62% -6% 2% -33% IT Training Arena Animation 27% Aptech -5% Aviation 22% -63% 20% INTERNATIONAL RETAIL 120% 100% 80% 60% 40% 20% 0% 29% 46% 59% 48% 100% 85%
13%
58%
Aptech English
MAAC
47% 42% 29% 28%
IT Training Arena Aptech Animation English
Others
ENTERPRISE
100% 80%
60% 40% 20% 0% -20%
29% 78% 38% 37% 13%
23%
Overall Retail % EBITDA of 27.6% in Q3 FY13 vis--vis 28.1% in Q3 FY12 Enterprise % EBITDA of 29.5% in Q3 FY13 vs. 23.1% in Q3 FY12
12%
42% 0% Aptech Training Learning Projects -13% Testing Solutions Services
Overall % Operating EBITDA was 27.9% in Q3 FY13 as against 27.2% in Q3 FY12

Q3 FY13 Q3 FY12
14
OPERATING PARAMETERS
15
Network (# of Centers) By Brand

DOMESTIC RETAIL 400 300 200 100 0 Aptech Computer Arena Aptech Animation Networking Aptech Aviation Aptech English MAAC 0 Aptech Testing Gross Additions 202 67 66 13 13 Aptech English 198 Aptech Computer Arena Animation Aptech Networking Aptech Aviation 1 1 MAAC Aptech English MAAC Grand Total 5 4 2 2 India 4 6 4 2 5 21 Q3 FY13 ROW 2 1 1 4 Total 6 7 5 2 5 25 Q2 FY13 105101 47 47 59 57 97 92 372 370 239 233 919* 900 ENTERPRISE 150 100 76 76 76 76
50
INTERNATIONAL RETAIL
120 100 80 60 40 20 0
114112
Aptech Arena Aptech Aptech Computer Animation Networking Aviation
* includes 11 owned and 7 semi-owned centers
16
Retail Enrollment & Booking

ENROLLMENT DOMESTIC RETAIL 10,000 8,000 6,000 4,000 2,000 0 IT Training Arena Animation Aptech Aviation Aptech English MAAC 7,704 8,584 13,788 13,434 ENROLLMENT INTERNATIONAL RETAIL 4000 3000 3,436 3,209 5,120 5,038
3,329 2,881 208 248

1,482 652 1,065 1,069
2000 1000 0
1,360
1,554 551 48
IT Training
Arena Aptech Animation Aviation
Aptech English
BOOKING DOMESTIC RETAIL 200.0 150.0 100.0 50.0 0.0 IT Training Arena Animation Aptech Aviation Aptech English MAAC 71 60 23 26 5 2 91
BOOKING INTERNATIONAL RETAIL 371 376 113 200 150 100 50 0 88 92 187 177 281 270
181 175
7 1
IT Training
Arena Aptech Animation Aviation

Q3 FY13
Aptech English
Q3 FY12
17
Retail Product Distribution

2.9% 1.3%
62.7%
18,908 `653 million
12.6% 82.3% 3.7%
33.4%
0.9%
ENROLLMENT PRODUCT SPLIT (Q3 FY13) ENROLLMENT PRODUCT SPLIT (Q3 FY12) BOOKING PRODUCT SPLIT (Q3 FY13) BOOKING PRODUCT SPLIT (Q3 FY12)
2.3% 60.6% 36.0%

18,472
1.1% 10.9% 82.9%

`646 million
5.2%
1.1%
University Career Certification STCs
18
Retail Region-wise Split

27% 1% 4% 2% 2 35 36 103 26
1,121
0%
66%
919
REVENUE SPLIT (Q3 FY13) REVENUE SPLIT (Q3 FY12)
NETWORK SPLIT (Q3 FY13) NETWORK SPLIT (Q2 FY13)
22% 3% 1%
1% 2
35
35
100 26
1,098
73%
900
India
Americas
Africa
CIS
APAC
Middle East
19
Enterprise Business Parameters

430 466 284 90.3% 79.6%
245
36 Web-Offline Proctored 39 12.7% 1 1 Web-Offline Proctored 9.5%
1.0% 0.2%
Paper & Pencil
6.7%
Others
Online
Paper & Pencil
Online
# OF TESTS BY CATEGORY (Unit 000) REVENUE BY PRODUCT (Training Solutions) 62.0% 46.7%
REVENUE BY CATEGORY (Aptech Testing) REVENUE BY MARKET (Learning Services) 77.6%
53.3% 38.0% 30.8%
69.2%
22.4%
IT
Customer Interface
US
EU Q3 FY13
India Q3 FY12
20
Employee Data
Employee Count as on 31st December 2012 = 436 Employee Count as on 30th September 2012 = 443
69 71
104
67 73 31
105
33
48
113
50
115
In addition to the above employees, there are 137 staff on contract as on 31st December 2012 vis--vis 145 as on 30th September 2012
21
KEY BUSINESS HIGHLIGHTS
22
Business Update
Placements for Aptech Computer Education grew by 48% and for Arena by 33% for the year till date period Franchised out two Aptech Computer Education own centers Refurbished and repurposed Arena Point launched with 4 programs in Design, Publishing, Web & Multimedia
App development technologies based, progressive Short Term Course (STC) combo (4 products) launched with certifications mapped to Microsoft
MF signed-up for Aptech Computer Education and Arena in Nepal
Aptech Learning Ladder IT & Multimedia curriculum for schools launched in International markets
23
MAAC 24FPS
24
Student Events
25
International Market
Aptech Vision 2012 Student Work Exhibition (Pakistan) Media Revolution Digital Art Exhibition (Arena Pakistan)
Aptech Learning Ladder

26
Some BTL Activities

Scholarship Tests MAAC-A-THON Run
MAAC-artoon Contest
Flash Mob
27
Marketing Campaigns
28
Major Media Coverage
29
THANK YOU
30
About Aptech
Aptech commenced its education and training business in 1986 and has globally trained over 6.5million students. Aptech is an ISO 9001:2008 organization and the first IT Training and Education company to get this certification for Education Support Services in 1993. Aptech has presence in more than 40 emerging countries through its two main streams of businesses Individual training and Enterprise Business. As a leader in career education, it has over 1300+ centres of learning across the world. Under Individual Training, Aptech offers career and professional training through its Aptech Computer Education, Arena Animation & Maya Academy of Advanced Cinematics (both in Animation & Multimedia), Aptech Hardware & Networking Academy, Aptech Aviation & Hospitality Academy and Aptech English Learning Academy brands. Enterprise business includes Content Development (Aptech Learning Services), Training and Assessment Solutions for Corporates & Institutions (Aptech Training Solutions, Aptech Assessment & Testing Solutions). For further information on Aptech Limited, please visit our website at www.aptech-worldwide.com or contact: Media Contact Investor Relations Contact
Shrutidhar Paliwal
+91.22.28272446 shrutidharp@aptech.ac.in
Saurabh Gada
+91.22.28272325 sgada@aptech.ac.in
31

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APTECH LIMITED

Investor Update Quarter Ending 31st Dec 2012

Safe Harbor Statement

All financial numbers in ` million

MD & CEOs Message

Ninad Karpe January 2013

All financial numbers in ` million

Add: Minority Interest

All financial numbers in ` million

Key Notes & Segment Results

Retail 300.04 82.46 68.90 -

Non-retail 67.35 20.07 18.28 -

Un-allocable (50.43) (57.38) -

Total 367.38 52.11 29.80 0.33 38.95 68.44

All financial numbers in ` million

Retail Revenue Analysis

Q3 FY12 Retail Revenue

All financial numbers in ` million

Training and Education expenses

All financial numbers in ` million

Key Balance Sheet Information

All financial numbers in ` million

All financial numbers in ` million

Training Learning Solutions Services

All financial numbers in ` million

Operating EBITDA By Brand

Aptech Training Learning Projects Testing Solutions Services

All financial numbers in ` million

% Operating EBITDA By Brand

47% 42% 29% 28%

IT Training Arena Aptech Animation English

29% 78% 38% 37% 13%

42% 0% Aptech Training Learning Projects -13% Testing Solutions Services

Overall % Operating EBITDA was 27.9% in Q3 FY13 as against 27.2% in Q3 FY12

All financial numbers in ` million

All financial numbers in ` million

Network (# of Centers) By Brand

Aptech Arena Aptech Aptech Computer Animation Networking Aviation

* includes 11 owned and 7 semi-owned centers

All financial numbers in ` million

Retail Enrollment & Booking

3,329 2,881 208 248

Arena Aptech Animation Aviation

Arena Aptech Animation Aviation

All financial numbers in ` million

Retail Product Distribution

12.6% 82.3% 3.7%

2.3% 60.6% 36.0%

1.1% 10.9% 82.9%

All financial numbers in ` million

Retail Region-wise Split

REVENUE SPLIT (Q3 FY13) REVENUE SPLIT (Q3 FY12)

NETWORK SPLIT (Q3 FY13) NETWORK SPLIT (Q2 FY13)

All financial numbers in ` million

Enterprise Business Parameters

Paper & Pencil

REVENUE BY CATEGORY (Aptech Testing) REVENUE BY MARKET (Learning Services) 77.6%

53.3% 38.0% 30.8%

All financial numbers in ` million

All financial numbers in ` million

KEY BUSINESS HIGHLIGHTS

All financial numbers in ` million