Slide 1: Investor Presentation August 2016
Investor Presentation August 2016 Joost Kreulen Chief Executive Officer Spencer Wreford Group Finance Director
Slide 2: Cautionary Statement
Global Focus, Local Presence 1 Cautionary Statement The information contained in this presentation is not audited, is past trends or activities should not be taken as a representation for personal use and informational purposes only and is not that such trends or activities will continue in the futu
Slide 3: Overview of the period
Global Focus, Local Presence 2 Overview of the period Diversified business model delivering strong growth Solid first half performance and profit growth Diversified model mitigating against market uncertainty in UK Delivering against strategy Continued progress against all KPIs Growth opportunities
Slide 4: Highlights
Global Focus, Local Presence 3 Highlights • Revenue growth of 15% (11% constant currency) • Consistency with 12 consecutive quarters of net fee income growth • Conversion ratio increases to 14.8% - fifth year in a row of growth • Full benefit from USA investment – performing in line with expectation
Slide 5: Financial summary
Global Focus, Local Presence 4 Financial summary £’m 2016 2015 % var Constant currency % var Revenue 106.1 92.4 15% 11% Permanent revenue 13.3 12.7 4% 2% Temporary revenue 92.8 79.6 17% 12% Net fee income 27.2 24.1 13% 9% Adjusted operating profit* 4.0 3.0 34% 27% Conversion ratio 14.8% 12.4% Adjust
Slide 6: Revenue analysis
Global Focus, Local Presence 5 Revenue analysis Permanent revenue +4% (+2% constant currency) Temporary revenue +17% (+12% constant currency) • Good growth in India and China • Technical & Industrial sectors in Germany & UK • UK sees slowdown in Q2 from EU referendum • Chile and Japan delivering org
Slide 7: Net fee income Conversion ratio
Global Focus, Local Presence 6 Net fee income Conversion ratio Net fee income +13% (+9% constant currency) Focus on increasing conversion ratio • Target of +10% average growth over 5 years • Costs being managed • Driven by strong growth from temporary sales • Develop scale of Group to help cover cen
Slide 8: Net debt
Global Focus, Local Presence 7 Net debt • Net debt up 3% to £10.2m (2015: £9.9m) • Average net debt up 14% at £10.5m due to investment Net debt (£m) spend of £3.4m 2012 2013 2014 2015 2016 0 • Net debt to debtors ratio down to 28% (2015: 32%) -2 -4 • Debt:EBITDA of 1.0x (2015: 1.3x) -6 -8 • Cash gen
Slide 9: Investments
Global Focus, Local Presence 8 INVESTMENTS
Slide 10: Investment in Rishworth Aviation
Global Focus, Local Presence 9 Investment in Rishworth Aviation • Leading specialist international recruitment company supplying leased pilots to airlines • Investment made on 5 July 2016 for 82.6% shares • Management committed to business, retaining 17.4% of shares • Provides pilots on 3-5 year con
Slide 11: Rishworth financial summary
Global Focus, Local Presence 10 Rishworth financial summary • Consideration fully paid in cash of US$10.0m (£7.5m) • Funded by new Revolving Credit Facility from HSBC of £10.0m • Rishworth held cash of US$9.3m (£7.0m) at time of investment • Expected to be earnings enhancing on an adjusted basis in
Slide 12: Airline market outlook is positive
Global Focus, Local Presence 11 Airline market outlook is positive • Demand is driven by growth in air travel, pilot attrition rates and crewing ratios • There are currently over 250,000 active commercial pilots around the world. Industry forecasts are that 28,000 new pilots will be needed each year
Slide 13: Looking Forward
Global Focus, Local Presence 12 LOOKING FORWARD
Slide 14: EU referendum
Global Focus, Local Presence 13 EU referendum • Slowdown in UK during May and June in the run up to the referendum - impact mitigated by stronger trading across the rest of the group • Since the referendum - stabilised and sales pipelines are holding up well • Whilst we are monitoring the short-term
Slide 15: Clear strategy Invest & Develop approach
Global Focus, Local Presence 14 Clear strategy Invest & Develop approach Develop - organic investment in Develop leading brands with sector existing brands expertise - Increase headcount in existing brands - Professional & specialist roles - Add a new vertical specialism - Sectors with long term gro
Slide 16: Summary and outlook
Global Focus, Local Presence 15 Summary and outlook • Diversified business model delivers growth and resilience • Full year profit expected to be in line with market forecast • Growth in NFI of 13%, ahead of average 10% target • Conversion ratio improvement continues, target of 20% remains • Strong
Slide 17: Q&A
Global Focus, Local Presence 16 Q&A
Slide 18: Appendices
Global Focus, Local Presence 17 Appendices
Slide 19: Income statement – Half year 2016
Global Focus, Local Presence 18 Income statement – Half year 2016 Constant £m 2016 2015 Change currency Revenue 106.1 92.4 15% 11% Net fee Income (gross profit) 27.2 24.1 13% 9% Overheads (23.2) (21.1) Adjusted operating profit* 4.0 3.0 34% 27% Interest (0.3) (0.2) Interest increase from late paid t
Slide 20: Balance sheet – 30 June 2016
Global Focus, Local Presence 19 Balance sheet – 30 June 2016 £m 2016 2015 Property, plant & equipment 1.6 1.1 Capital expenditure of £0.4m on fixed assets. Goodwill and intangibles 35.0 24.6 Deferred tax asset 1.0 0.7 37.6 26.4 Trade and other receivables 42.3 36.5 Debtor days at 30 June of 51 (2015
Slide 21: Cash flow – Half year 2016
Global Focus, Local Presence 20 Cash flow – Half year 2016 £m 2016 2015 Cash generated from operations was £4.1m, following a £0.2m investment in working capital. Movement in invoice discounting Profit for the period 1.8 1.8 (£0.7m investment) now recognised in cash flows from financing Depreciation
Slide 22: An international staffing specialist: Multi-branded
Global Focus, Local Presence 21 An international staffing specialist • Strategy to develop leading brands with sector expertise Multi- • Diversified and balanced by geography and sector to lower risk branded • Understand the requirements of candidates and clients • Multi-branded model to address glo
Slide 23: An international staffing specialist: Growth Markets
Global Focus, Local Presence 22 An international staffing specialist • Not reliant on any single market or sector Growth • Brand expansion across geographies Markets • Attack market vertically in markets with talent shortages • Operating in key sectors offering international growth opportunities % n
Slide 24: An international staffing specialist: Operational Mix
Global Focus, Local Presence 23 An international staffing specialist • Temporary staffing bias reflective of economic cycles Operational • Focus on professional & specialist job levels Mix • Temporary sales increasing following move away from low value work • Investment focus to increase temporary s
Slide 25: Attract and retain key management
Global Focus, Local Presence 24 Attract and retain key management • Management own shares in their brands Management • Attract and retain key staff Equity • Brand management incentivised to grow long term profits • Decentralised structure leaves operational responsibility with local managers • Share
Slide 26: Directors
Global Focus, Local Presence 25 Directors Board has extensive knowledge of the staffing industry with a combined experience of 100 years Anthony Martin – Chairman Anthony served as Chairman and CEO of Select Appointments and Vedior NV, building one of the world’s largest recruitment companies, befor
Slide 27: Shareholder information
Global Focus, Local Presence 26 Shareholder information Shares in issue: 49,019,132 ordinary shares Market capitalisation: £46 million Outstanding options: 2.8m (5.5% of shares in issue) Significant shareholders (updated on 16 August 2016): Anthony Martin 13,924,595 28% Liontrust Asset Management 6,