Preliminary Results for the year to 31 July 2014 Brian Wilkinson – Executive Chairman Adrian Gunn – Chief Executive Officer Tony Dyer – Chief Financial Officer October 2014
Results
Performance Summary ↑ 10% ↑ 17% ↑ 27% Group Revenue £451.6m Net Fee Income £45.0m EBITA £13.6m (2013: £408.9m) (2013: £38.4m) (2013: £10.7m) ↑ 20% ↑ 19% ↑ 14% Profit Before Tax £11.9m Adjusted Basic EPS 39.1 pence 1 Final Dividend 14.59 pence 2 (2013: £9.9m) (2013: 32.9 pence) (2013: 12.85 pence) 1 Adjusted Basic EPS excludes the amortisation on acquired intangibles 2 Recommended 3
Income Statement Year to 31 July Like for Like 1 2014 2013 Change £m £m % % Revenue 451.6 408.9 +10% +7% Contract NFI 32.8 27.2 +21% +14% Contract gross margin (%) 7.5% 6.8% Permanent fees 12.2 11.2 +9% +9% Gross profit (NFI) 45.0 38.4 +17% +13% Gross margin (%) 10.0% 9.4% Operating overheads (31.4) (27.7) -13% -10% EBITA 13.6 10.7 +27% +19% NFI conversion (%) 30% 28% Operating margin (%) 3.0% 2.6% Amortisation (0.7) (0.2) Profit from operations 12.9 10.5 +23% Net interest (1.0) (0.6) Profit before tax 11.9 9.9 +20% Taxation (2.8) (2.4) Profit after tax 9.1 7.5 +21% 1 Like for like excludes the effects of acquisitions 4
Earnings per share & Dividends Year to 31 July 2014 2013 Change Profit after tax 9.1 7.5 £million +22% Average shares in issue 24.7 23.5 million +5% Shares under option 1.4 1.0 million +42% Fully diluted shares 26.1 million 24.5 +6% Earnings per share Basic 37.0 32.0 pence +16% Diluted 35.0 30.7 pence +14% Adjusted earnings per share 1 Basic 39.1 32.9 pence +19% Diluted 36.9 31.6 pence +17% Dividend per share 20.0 18.0 pence +11% Adjusted dividend cover 1 2.0 x 1.8 x times +11% 1 Adjusted earnings per share excludes the amortisation on acquired intangibles 5
Balance Sheet & Cashflow ↑ 11 ppts ↓ £7.4m ↓ 3 days Debtor Days 46 days Net debt: £3.1m Operating cash conversion: 121% Debtor days: 46 days (2013: 49 days) (2013: £10.5m) (2013: 49 days) (2013: 110%) ↓ 1 day ↑ 32% ↑ £10m Banking facilities: £60m Creditor days: 8 days Net assets: £42.7m (2013: £50m) (2013: 9 days) (2013: £32.3m) 6
Cashflow £15.0m £4.1m £10.0m £0.0m £0.3m £0.7m £2.1m £5.0m £2.8m £13.6m £4.2m £0.0m £4.5m (£3.1m) (£5.0m) (£10.0m) (£10.5m) (£15.0m) July 2013 EBITA Non-cash Equity Working Net Cap-Ex Interest Taxation Acquisition Dividends July 2014 items Placing Capital & Fees 7
Contract activity £0.70m 10,000 £0.67m 9,000 £0.60m £0.56m 8,000 £0.50m £0.50m 7,200 7,000 £0.42m 7,000 £0.45m £0.44m 6,700 £0.41m 6,000 £0.38m £0.40m 6,000 5,000 5,100 £0.30m 4,800 4,500 £0.30m 4,400 £0.25m 4,000 3,700 3,400 3,000 £0.20m 2,000 £0.10m 1,000 10.4% 9.8% 9.5% 9.0% 8.4% 7.8% 7.0% 6.8% 6.8% 7.5% £0.00m - 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Contractors at period end Average weekly Net Fee Income Contract Margin % 8
Permanent activity £0.25m £0.25m £10,000 £0.23m £0.22m £0.22m £9,000 £0.19m £0.20m £8,000 £0.17m £0.17m £7,000 £0.15m £6,000 £0.13m £0.12m £5,000 £5,000 £4,940 £4,580 £4,580 £0.10m £0.09m £4,000 £3,900 £3,900 £3,800 £3,800 £3,700 £3,600 £3,000 3,000 2,870 2,550 2,600 2,190 £0.05m £2,000 2,120 2,120 1,670 1,520 1,280 £1,000 £0.00m £- 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Average Fee Placements Average weekly Fees Note: Average fees excludes Alderwood 9
10 Year Performance Summary £50m £500m £45m £450m £40m £400m £35m £350m £30m £300m £25m £250m £20m £200m £15m £150m £10m £100m £5m £50m 36% 40% 40% 42% 39% 34% 23% 24% 28% 30% £0m £0m 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Net Fee Income EBITA Revenue NFI Conversion % 10
Operating Review
NFI Business Mix 25% 27% 28% 28% 29% 75% 73% 72% 72% 71% 2010 2011 2012 2013 2014 Contract Permanent 12
NFI Sector Split £17.9m * £14.4m £13.7m £10.6m £7.8m £27.1m £24.0m £22.4m £19.2m £18.4m 2010 2011 2012 2013 2014 Engineering Professional Services * Including £1.8m NFI from Provanis 13
Engineering Overview 14
Engineering Sector NFI by sub-sector NFI by type 2014 2013 Infrastructure £8.0m £5.9m Energy £4.7m £4.7m NFI Automotive £4.3m Conversion £4.1m 39% Aerospace £3.5m (2013: 37%) £3.0m Maritime £2.8m £3.0m General Engineering £3.8m 2014 Contract NFI: 83% Permanent Fees: 17% £3.3m 2013 Contract NFI: 82% Permanent Fees: 18% 15
Engineering Growth Drivers Infrastructure Maritime Energy North Sea EPC contractors £38bn investment into rail £3.2bn MOD award contract engineering projects for upkeep of RN fleet directly recruiting Highways Agency reporting Type 26 Frigate programme Margins and pay rates record levels of spending moving into design stage under pressure New 5 year water AMP Successor Submarine Focus on niche subsea, drilling and equipment cycle starts January 2015 programme moving into design stage manufacturers Increased funding in commercial property Canada and Singapore Major Accounts continue to providing opportunities to provide medium term Major accounts signed up to expand internationally visibility of work long term agreements 16
Engineering Growth Drivers General Aerospace Automotive Engineering 3.9% growth in output from Limited demand for design High End OEM’s benefiting and development of new from global demand UK manufacturing sector aircraft structures UK supply chain at record Strong growth within Manufacturing order book levels of activity medical devices and for commercial aircraft at specialist industrial JLR with multiple platforms equipment manufacturers record capacity at R&D stage Continued research in new Leveraging our market UK centre of excellence for materials and advance leading brand across the advanced automotive manufacturing processes broader engineering and engineering manufacturing community Increased activity in drone International growth in development Germany and China 17
Professional Services Overview 18
Professional Services Overview NFI by type NFI by sub-sector 2014 2013 Technology: Connectus £9.8m £9.1m Provanis £1.8m NFI Professional Staffing £6.3m Conversion £5.3m 17% Aerospace (2013: 12%) Marine General Engineering 2014 Contract NFI: 57% Permanent Fees: 43% 2013 Contract NFI: 53% Permanent Fees: 47% 19
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 20
Our 2017 strategy Sharpen Invest in Greater scale Go-to recuiter attractive yet even more in our chosen our focus markets specialist markets Place higher Work with Charge right Move up level clients who price for value chain candidates value service quality service Attract International Follow key Go global international opportunities clients candidates for candidates overseas 21
Our 2017 vision Market leading specialist recruiter Employer of choice Best partner to clients & candidates Rapidly developing international business Premium stock for investors 22
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 Committed funding Flexible Resilient Facilities of £60m Efficient systems and high Contract business model operational flexibility Yield International Expert Solid dividend payout Expanding into selected Capability and resources to record markets increase market share in permanent recruitment 23
Outlook Increasing contract margin percentage Volume of permanent vacancies increasing Improvements in the NFI we generate per sales head Increasing operational efficiencies Continued investment is sales headcount in growth markets “The new financial year has started well, building on our solid foundations. We are confident that the Group will continue to make significant progress again this year.” 24
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