Gattaca Plc · LSE:GATC
Gattaca — H1 2016 Earnings Presentation
27 slides from Gattaca's earnings presentation, April 2016
Slide 1: Interim Results for the period to 31 January 2016
Interim Results for the period to 31 January 2016 Brian Wilkinson – Group Chief Executive Officer Tony Dyer – Group Chief Financial Officer April 2016
Slide 2: Highlights
Highlights • Solid financial performance • Strength in Engineering offset by some weakness in Technology • Integration of Networkers on track • Significant cost synergies realised of £2.3m, in excess of market expectations • Investments in connectivity and business development implemented • Managing
Slide 3: Results
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Slide 4: Income Statement
Income Statement Period to 31 Janaury 2016 2015 Pro-forma Reported Pro-forma 1 1 Reported Adjustments Underlying Reported Underlying Change Change £m £m £m £m £m % % Revenue 297.9 (0.8) 297.1 220.2 298.0 +35% -0% Contract NFI 26.6 (0.1) 26.5 16.3 27.1 +63% -2% Contract gross margin (%) 9.2% 9.2% 7.6
Slide 5: Earnings per share & Dividends
Earnings per share & Dividends Period to 31 Janaury 2016 2015 Pro-forma Reported Pro-forma 1 1 Reported Adjustments Underlying Reported underlying Change Change £m £m £m £m £m % % Profit before tax 6.9 2.5 9.4 5.1 9.1 +35% +3% Taxation1 (2.2) (0.5) (2.7) (1.3) (2.8) Effective tax rate 31.5% 28.5% 25
Slide 6: Cashflow
Cashflow Net operating cash generated in the period of £8.8m (£5m) (£10m) (£15m) £3.3m (£0.2m) (£20m) £5.9m (£0.6m) (£1.6m) (£24.8m) (£25m) £7.0m (£5.0m) (£30m) (£33.6m) (£35m) (£40m) Net Debt: Adjusted EBIT Working Non-cash Capital Interest and Taxation Dividends Net Debt: July 2015 capital Items e
Slide 7: Operating cash conversion
Operating cash conversion Consistent cash operating cash conversion H1 Year Revenue Growth 400% 50% 38% 28% 23% 14% 300% 14% 11% 20% 10% 10% 4% 0% 276% 245% 200% -2% -10% 175% 144% 140% 132% 130% 124% 100% -40% 115% 115% 110% 108% 106% 95% 93% 84% 76% 64% 43% 0% -70% -72% -100% -100% 2007 2008 2009
Slide 8: Debtor Days
Debtor Days Combined debtor days improved 70 66 64 52 48 49 44 46 42 31 Jan 16 31 July 15 31 Jan 15 31 Jan 16 31 July 15 31 Jan 15 31 Jan 16 31 July 15 31 Jan 15 Matchtech Networkers Combined 8
Slide 9: Integration
Integration • Integrating continuing and expect to be largely complete by 31 July 2016 • Identified annualised gross synergies of £2.3m to be fully realised in 2017 • More cost synergies to follow as we progress the integration and we combine some back office functions • Chosen to re-invest some of
Slide 10: Operating Review
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Slide 11: Net Fee Income balance
Net Fee Income balance By Segment By Type Engineering Contract Technology Permanent 27% 40% 60% 73% By Geography UK Europe 7% Americas Asia MEA 8% 71% 5% 9% 11
Slide 12: 14 offices worldwide, No.1 UK Engineering Recruitment Specialist
14 offices worldwide No.1 4,000 Permanent placements annually UK’s largest Engineering Recruitment Specialist1 9,000 100 Contractors on assignment Countries we recruit in 500 Top 3 UK Technology Recruitment Sales staff specialist1 1 Source: Recruitment International Top 500 Report 2015 12
Slide 13: Global Headcount
Global Headcount United Kingdom Americas Asia Middle East & Africa 12 1 1 1 6 10 9 16 135 15 25 538 56 46 74 (76%) 261 (8%) (6%) (10%) 130 30 30 32 Engineering Technology Group Support Management Global headcount: 714 Sales: 529 (74%) Support: 170 (24%) Management: 15 (2%) 13
Slide 14: Engineering
Engineering NFI NFI Run Rate 2016 H1 2015 H1 2016 H1 2015 H2 2015 H1 21.7 0.89 20.3 0.83 0.83 15.3 0.63 0.6 0.6 14.6 6.4 5.7 0.26 0.23 0.23 Contract Perm Total Contract Perm Total NFI by sector NFI by type Permanent Fees 10% Infrastructure 7% Energy 29% 27% 28% 2016 H1 General Engineering 2015 H1 8%
Slide 15: Engineering Growth Drivers
Engineering Growth Drivers Infrastructure Energy Maritime Infrastructure • Rail - project delivery: HS2; • Northern Europe - 9 offshore wind • UK defence Type 26 frigate & Crossrail (phase 2); Wessex to farms scheduled for construction successor submarine Waterloo line improvements in 2016 • Canadia
Slide 16: Technology
Technology NFI £m NFI Run Rate £m 2016 H1 2015 H12 2016 H1 2015 H2 2015 H1 15.9 0.65 14.2 0.58 0.58 12.4 0.51 11.2 0.46 0.47 3.0 3.5 0.12 0.11 0.14 Contract Perm Total Contract Perm Total NFI by sector NFI by type Permanent Fees IT 21% Telecoms 22% 2016 H1 42% 2015 H1 58% 78% 79% Contract Net Fee In
Slide 17: Technology Growth Drivers
Technology Growth Drivers Development Cloud Cyber security Infrastructure • Organizations rely heavily on the • Cloud continues to reshape • Increasing spend on Cyber web as a channel for connecting enterprise IT Security with customers, clients, partners • Prediction that more than half of • Consta
Slide 18: Outlook
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Slide 19: 2016/17 key opportunities
2016/17 key opportunities Rolling out Engineering services internationally Strengthening business development to generate more major account business Combining Networkers contingency sales success with Matchtech’s strong major account management Leveraging relationships by mobilising internal talent
Slide 20: Outlook
Outlook Demand for skilled engineers remains strong and telecoms market buoyant Niche specialist market segmentation implemented to improve IT performance Selected consultants moving to international offices to accelerate growth Good business development pipeline and encouraging signs from initial j
Slide 21: Appendices
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Slide 22: Effective Tax Rate
Effective Tax Rate Period to 31 Janaury 2016 2015 Pro-forma Reported Adjustments Underlying Reported underlying £m £m £m £m £m Profit before tax 6.9 2.5 9.4 5.1 9.2 Corporation Tax Rate 20.0% 20.0% 20.7% 28.3% Corporation Tax 1.4 0.5 1.9 1.1 2.6 Non-deductable expenses 0.2 0.2 0.2 0.2 Irrecoverable
Slide 23: Foreign exchange
Foreign exchange Currencies • Contracts written back to back in same currency (Revenue & Payroll) 5% 4% £ Sterling $ US In the period 17% € Euro Other • Gross profit gain by £53k • EBIT gain by £184k (devaluation of 74% Rand) • Balance Sheet effect gain on conversion £590k through financing 1% sterl
Slide 24: Our purpose
Our purpose Engage our staff Delight our clients Promote our candidates Within the top 5% of Going the extra mile The relationship benchmark group Engagement score of ‘You get us’ Specialist 90% 91% completed staff Market intelligence Personalised approach engagement survey 24
Slide 25: Our 2017 strategy
Our 2017 strategy Sharpen Invest in Greater scale Go-to recuiter attractive yet even more in our chosen our focus markets specialist markets Move up Place higher Work with Charge right level clients who price for value chain candidates value service quality service Think Attract International Follow
Slide 26: Our 2017 vision
Our 2017 vision Market leading specialist recruiter Employer of choice Best partner to clients & candidates Rapidly developing international business Premium stock for investors 26
Slide 27: Our Investment proposition
Our Investment proposition Well Balanced Established Specialist Broad client relationships Strong track record of Niche sector expertise and business mix organic NFI and profit growth Flexible Resilient Committed funding Efficient systems and high Contract business model Facilities of £95m operation