Investor presentation jan2015 final

  • Published on
    19-Jul-2015

  • View
    15.237

  • Download
    2

Transcript

Results for the year ended 31 December 2014March 2015Page 2Results for the year ended 31 December 2014 - March 2015Summary > Year of restructuring after period of investment and diversification > Group now focused on core areas which will deliver profit growth > Exceptional charge for the full year of 2million > Improved profitability in 2H 2014 > Clients and candidates unaffected by business restructuring > Mitigation strategy in place to take account of lower oil prices > Board changes announced intended to ensure Group delivers its 2015 objectives > Final dividend proposed of 3.1p per share - full dividend for year of 4.6p per share maintained Page 3Results for the year ended 31 December 2014 - March 20152014: The choice for specialist talent, no matter where they are in the worldJoined-up practices give global capacityAgile to client demand: hubs and spokes will be fluidDevelopment of existing clients and territories to deliver sustainable profitHydrogen is a global specialist recruitment business, placing hard to find candidates in around 70 countries each year. Our joined up practices combine international reach with local expertise and specialist knowledge Technical & Scientific (T&S) > Oil and Gas > Life Sciences > PowerStavangerDubai Hong KongEdinburghHoustonLondonSingaporeHubsSpokesLegal entitiesKuala LumpurCountries where Hydrogen places candidatesSwitzerlandGermanyNetherlandsSydneyPerthProfessional Support Services (PSS) > Business Transformation > Finance > Legal > TechnologyFinancials Page 5Results for the year ended 31 December 2014 - March 2015Financial highlights > Net Fee Income (NFI) declined by 11.8% (7.5% like for like) to 28.2m > Exceptional charge for the year of 2.0m to restructure the business > Impact of cost reduction programs seen in 12.8% decline in operating costs 2014 v 2013 > Conversion ratio 9.1% (2013: 7.9%) > DSOs increased to 31 days (2013: 23 days) > Period end net debt increased to 6.7m (2013: 4.0m) > Temporary increase in trade receivables caused by one off delay in payment from a leading client > Final dividend proposed to be maintained at 3.1p; payable 29 May 2015 (ex div 30 April; record date 1 May) Page 6Results for the year ended 31 December 2014 - March 2015Income statement Year ended 31 December 2014 Year ended 31 December 2013 ChangeRevenue 169.4m 181.6m (6.7%)Gross Profit (Net Fee Income) 28.2m 31.9m (11.6%) - Permanent NFI 12.9m 15.0m (14.0%) - Contract NFI 15.3m 16.9m (9.5%)Operating costs 25.3m 29.2m (13.4%)Operating profit 2.6m 2.5m 4% - Forex losses (0.3m) (0.2m) (50%) - Finance costs (0.2m) (0.2m) - - Exceptional item (2.0m) - -Profit for the period before tax 0.4m 2.4m (83%)Basic (loss)/earnings per share (0.4p) 6.8p -Adjusted (loss)/earnings per share 8.5p 6.8p 25%Proposed dividend for the year 4.6p 4.6p -KPIsConversion ratio (NFI: Op profit before exceptional) 9.1% 7.9% 1.2%Page 7Results for the year ended 31 December 2014 - March 2015 Year ended 31 December 2014Redundancy costs 1,186,000Provision for onerous contract re leasehold property 634,000Tangible fixed asset write-off 69,000Advisors costs 66,000Other 33,000TOTAL 1,988,000 > Restructuring resulted in reported annual cost savings of 3.8m 2014 v 2013; short payback period > Redundancy costs predominantly no more than contract notice period > Surplus capacity at Eastcheap will be sub-let early in 2015Exceptional itemsPage 8Results for the year ended 31 December 2014 - March 2015Summary financial position Year ended 31 December 2014 Year ended 31 December 2013 Non-current assets 16.7m 17.1mIntangible assets 14.9m 14.8mTangible assets 1.5m 1.9mOther assets 0.3m 0.4mCurrent assets 37.1m 33.3mDebtors 31.1m 29.7mCash and cash equivalents 6.0m 3.6mTOTAL ASSETS 53.8m 50.4mCurrent liabilities 28.5m 23.8mNon-current liabilities 0.1m -TOTAL LIABILITIES 28.6m 23.8mNET ASSETS 25.2m 26.6mDebtor days 31 23Headcount at period end 285 383 > Continued tight control of working capital > Delayed payment from one significant client affected debt and trade receivables at year end. Position reversed in early January 2015 > Balance sheet remains strongPage 9Results for the year ended 31 December 2014 - March 2015Summary funds flow and net funds/(debt) position Year ended 31 December 2014 Year ended 31 December 2013Cash from operations 2.6m 3.4mWorking capital movement (1.9m) (0.4m)Finance costs (0.2m) (0.1m)Tax paid (0.3m) (0.8m)Net cash invested (0.3m) (1.9m)Equity dividends paid (1.0m) (1.0m)Forex movement (0.1m) (0.4m)Exceptional costs (1.5m) -DECREASE IN FUNDS (2.7m) (1.2m)Net debt at beginning of period (4.0m) (2.8m)Net debt at end of period (6.7m) (4.0m) > Underlying business continues to be cash generative > Delayed remittance of 5.0m led to 2.0m increase in working capital > Strong cash collection in early 2015 resulted in net cash position in both January and February 2015Page 10Results for the year ended 31 December 2014 - March 2015Core KPIs: productivity per head2005 2006 2007 2008 2009 2010 2011 2012 2013 2014020406080100120898285869070879910790 > Investment in headcount at end 2013 impacted productivity; projects did not come through > Restructuring in 1H 2014 led to significant headcount reduction > Improvement in PPH in 2H 2014 following removal of underperformers > PPH for 2H 2014 89k. Average for the year 82kPage 11Results for the year ended 31 December 2014 - March 2015Core KPIs: split of sales headcount at period end > Significant reduction in headcount following restructuring > Ratio of international to UK broadly unchanged at 63% > Ratio of sales to support heads 2.9 (2013: 3.3)InternationalInternational focus, UK basedUK sales2005 2006 2007 2008 2009 2010 2011 2012 2013 2014191209247197 193237269 274050100150200250300294210Page 12Results for the year ended 31 December 2014 - March 2015Core KPIs: UK and international > NFI from outside the UK decreased by 26.2%. Main causes: Oil & Gas, Australia and strength of Sterling > NFI from outside the UK represented 37% of NFI (2013: 44%) > NFI up 5% in Singapore, over 300% growth in Houston up to the end of 2014 > Further development of client opportunities in Malaysia - agreement reached with experienced local JV partner > NFI from the UK broadly unchanged at 17.9m (2013: 18.0m) 2007 NFI 2008 NFI 2009 NFI 2010 NFI 2011 NFI 2012 NFI 2013 NFI 2014 NFIInternationalUK0102030405060708090100% NFIPage 13Results for the year ended 31 December 2014 - March 2015Core KPIs: operating segment analysispre 2008 NFI 2008 NFI 2009 NFI 2010 NFI 2011 NFI 2012 NFI 2013 NFI 2014 NFITechnical & Scientific (T&S)Professional Support Services (PSS)0102030405060708090100 > PSS boosted by strong performance of Legal practice > New strategic client wins in Business Transformation > Technology NFI increased by 33% > NFI from T&S held back by declining activity in Oil and Gas sector > Mitigation plans in place for Oil and Gas - will focus on contract activity and support client relationships for the long term > Continuing skills shortages in Life Sciences and Engineering > T&S represented 42% of Group NFI (2013: 45%)% NFIPage 14Results for the year ended 31 December 2014 - March 2015Dividend history > Focus is on profit > Track record of dividend payments has been maintained > Proposed final dividend of 3.1p per share; total 4.6p for the year > Market valuation now less than net assets > Agile, balanced business > Strategy for 2015 is clear: aims are to increase EBITDA and cash generation and deliver a consistent level of NFIDividends paidpence per share2009 2010 2011 2012 2013 20140123454.64.5 4.64.34.14.1Our strategyPage 16Results for the year ended 31 December 2014 - March 20152014 Strategy: growing a balanced businessUKInternationalProfessional Support ServicesTechnical & ScientificContractPermanentPUBLISHEDRESULTS20082009201020112012201320142015201656%44%0%20%40%60%80%100%54%46%PUBLISHEDRESULTSPUBLISHEDRESULTS2008200920102011201220132014201520160%20%40%60%80%100%63%37%02040608010058%42%200820092010201120122013201420152016 > KPIs were set for longer term > Target of at least 50% contract was achieved quite quickly. Greater predictability of contract earnings and a move from permanent to contract and contingent hiring means that we expect the proportion of contract business to increase > No further international diversification required. We will move in if a client needs us on the ground > Will continue to be diverse and agile to markets with different economic cycles; balanced portfolio of client and candidate disciplines2016 target: at least 50% contract 2016 target: at least 65% international 2016 target: at least 50% Technical & ScientificPage 17Results for the year ended 31 December 2014 - March 2015Strategic goalsProfit growth Company to be cash neutral (in growth mode) dividend bearingGrowth in existing clientsRecruit, develop and retain exceptional staff Professionalism and efficiency Contract NFI growth, permanent business adding profit 2015 strategic goalsPage 18Results for the year ended 31 December 2014 - March 2015Plan to 2017INFRASTRUCTUREANDCAPABILITYSimple levers to manage the businessAbility to transact in multiple locationsLong term relationships with candidates and clientsExperienced recruiters living and breathing Hydrogen valuesThree key areas of focus: > Differentiates Hydrogen > Global client agreements > Candidate mobility > Agility to respond to growth markets through proven incubator process > Hub and spoke model > Strong client base in key markets > Single platform > Single brand > Operational expertisePage 19Results for the year ended 31 December 2014 - March 2015Hydrogen valuesPage 20Results for the year ended 31 December 2014 - March 2015Joined up practices > Practices are our candidate specialisms. They offer both candidate and client access to specialist recruiters, supported by a global network > Joining up our practices allows us to differentiate ourselves from local competition and disparate global players > Joined up approach has enabled us to scale business with clients: opened doors in Houston; large scale client wins in Malaysia and UK > Our key global growth practices are: Technology, Life Sciences, Business Transformation Oil & Gas Business TransformationLife SciencesTechnologyLegal FinancePowerPage 21Results for the year ended 31 December 2014 - March 2015Market selectionClients > Ability to spot new markets has transformed client list > 2010 - 2014 period of expansion and diversification > Markets have been selected based upon long term candidate demographics where demand will outstrip supply > Emphasis now is on growing existing clients > Narrowing down to focus on profitable core offering > Restructuring means we have right size of business and capacity to make the most of opportunities2010 2014Banking and financeTech & MediaO&G/Power/EnergyO&G/Power/EnergyLegalLife SciencesOtherProfessionalservicesProfessionalservicesBankingand financeTech & MediaLegalLife SciencesOtherPage 22Results for the year ended 31 December 2014 - March 2015Driving competitive advantageCapability > Restructuring has not impacted capacity > Professionalism, high performance, high productivity > Clear practice differentiation - detailed knowledge of nicheInfrastructure > Investment in IT and MI gives competitive advantage > Performance monitoring software ahead of competition > Cloud based approach; single database of clients and candidates accessible from any locationINFRASTRUCTUREANDCAPABILITYPage 23Results for the year ended 31 December 2014 - March 2015Current trading > Focus on performance and profit > Cost control to maintain profit conversion > Significant client opportunities > Too early to predict full yearPage 24Results for the year ended 31 December 2014 - March 2015Cautionary Statement > The information contained in this presentation is not audited; it is for personal use and informational purposes only and is not intended for distribution to, or use by, any person or entity in any jurisdiction in any country where such distribution or use would be contrary to law or regulation, or which would subject any member of the Hydrogen Group to any registration requirement. > Statutory reports and accounts will be available on the Groups website from 6 March 2015. Statutory accounts for the year ended 31 December 2014 will be filed at Companies House shortly. > Certain statements included or incorporated by reference within this presentation may constitute forwardlooking statements that are based on current expectations or beliefs, as well as assumptions about future events. There are risk factors that can cause actual results to differ materially from those expressed in or implied by such statements. Accordingly, no assurance can be given that any particular expectation will be met and reliance should not be placed on any forward-looking statement. > Hydrogen Group disclaims any intention or obligation to revise or update any forward-looking statements that may be made in this presentation, regardless of whether those statements are affected as a result of new information, future events or otherwise. Nothing in this presentation should be construed as a profit forecast. > This presentation does not constitute or form part of any offer or invitation to sell, or any solicitation of any offer to purchase any shares in the Company, nor shall it or any part of it or the fact of its distribution form the basis of, or be relied on in connection with, any contract or commitment or investment decision relating thereto, nor does it constitute a recommendation regarding the shares of the Company. Past performance cannot be relied upon as a guide to future performance. Liability arising from anything in this presentation shall be governed by English Law. Nothing in this presentation shall exclude any liability under applicable laws that cannot be excluded in accordance with such laws.Hydrogen Group plc > 30 Eastcheap, London EC3M 1HD, United Kingdom > E: info@hydrogengroup.com > T: +44 (0)20 7002 0000 > F: +44 (0)20 7929 1200Registered in England & Wales No. 5563206 Hydrogen 2015Hydrogen is a global specialist recruitment business, placing exceptional, hard to find candidates around the world.Our joined up practices combine international reach with local expertise and specialist knowledge.