HARVEY NASH GROUP PLC. Albert Ellis, CEO Mark Garratt, CFO. results ahead of expectations increased dividend strong platform to accelerate growth

Transcription

1 HARVEY NASH GROUP PLC Albert Ellis, CEO Mark Garratt, CFO results ahead of expectations increased dividend strong platform to accelerate growth

2 HIGHLIGHTS Results ahead of expectations Strong operating cash inflow final dividend increased by 7% Strengthened balance sheet and improved working capital UK & Ireland: Performed strongly against a market decline Rest of World: USA bad debt write off, Asia mixed Europe: excellent results ahead of expectations 2

3 STRATEGY STREAMLINE FOCUS GROWTH Dispose of non-core businesses Eliminate losses Focus on strengths Technology & Digital Talent Drive growth in key geographies Market leadership & strong brands

4 Financials

5 INCOME STATEMENT Strong revenue growth despite market uncertainties m m % Revenue Gross profit Operating profit before non-recurring items (8) Finance costs (0.7) (0.8) (20) Profit before tax before non-recurring items (7) Non-recurring items (0.1) (0.2) (48) Profit before tax (6) Tax* (2.2) (2.2) (2) Profit after tax (7) * Continuing items 6% constant currency Lower average borrowings FY17 m USA bad debts (0.5) Goodwill (0.1) Aged accruals 0.5 Total (0.1) 5

6 BALANCE SHEET Debtor days reduced to record 38 days (2016: 41 days) m m % Goodwill & intangibles Tangible assets (9) Net deferred tax Long term loan receivable Trade & other receivables Trade & other payables (133.2) (129.7) 3 Tax liabilities (2.3) (1.6) 55 Provisions & deferred consideration (0.3) (0.6) (57) Net cash Net assets Movement mainly FX Tight control of w/capital 7% reduction, debtor days Strong cash generation FY 2017 H2 cash inflow 6

7 CASH FLOW STATEMENT Cash generated from operating activities m m % EBITDA (1) Capex (1.1) (2.0) (47) After non-recurring items Interest (0.7) (0.8) (20) Capitalised software cost - (2.1) (100) Taxation (2.9) (3.3) (12) Free Cash Flow Working capital Acquisitions / disposals (4.6) (4.8) (3) Loan advanced (2.0) - - Dividends (2.8) (2.7) 7 Movement in net cash No longer part of the Group 2017: 4.2m NT disposal and 0.4m Japan consideration 2016: 2.7m NT disposal and 2.1m Belgium consideration 7

8 CASH FLOW Strong cash generation, significantly ahead of expectations '000 Operating profit to free cash flow 20,000 18,000 16,000 14,000 7,359 (2,935) (676) 14,404 12,000 2,131 10,000 8,000 8,525 6,000 4,000 2,000 0 Operating profit Non-cash items Working capital Tax paid Interest paid Free cash flow 8

9 SERVICE LINES FY17 Gross Profit Split FY16 Gross Profit Split 39% 39% 12% Perm Contract 13% 10% 39% Managed Services Outsourcing 7% 41% Gross Margin FY17 FY16 FY15 FY14 Perm 84.4% 85.8% 86.9% 80.7% Contract 12.6% 12.8% 12.6% 12.7% Managed Services 2.9% 2.8% 2.4% 2.2% Outsourcing 38.5% 38.9% 42.8% 41.6% Total 12.5% 13.1% 12.4% 12.0% Gross Profit ( m) FY17 FY16 % Perm Contract Managed Services Outsourcing Total

10 INCREASING SHAREHOLDER RETURNS 0.7 Interim Final Dividend per share (pence) FINAL DIVIDEND 2.5p +7.0% C.A.G.R % m 20 Cash generated from operating activities DIVIDEND COVER 2017: 2.2 x

11 Operational Review Strategy

12 Disruption Our clients need us more than ever Technology and disruption is everywhere, requiring new talent Tech, Media, Telecoms Near extinction of print media Migration of ad revenue IP Voice & messaging Industrials Internet of Things 3D printing Next gen automation Financial Institutions Digital Banking Fintech disrupting of wealth, trading, lending, forex Energy & Natural Resources Renewables Smart Grids Internet of Things Infrastructure & Transport Uber, car-sharing Driverless cars Intelligent transport networks Financial Investors Crowdfunding Alternative finance Consumer Online sales, E-commerce, Health Monitoring, remote diagnostics Real Estate Flexible workplaces Online sales Digital Innovation 12

13 UK & IRELAND CC m m % % Gross profit (0) (2) Operating profit (14) (17) Market share gains, revenue held up well in a declining market Brexit softened demand in London -3% (Financial Services) UK regions +2%, Ireland +15% Strategic wins Recruitment Solutions seeing increased demand Nearshore low-cost recruiting centre in Poland fully operational 13

14 EUROPE CC m m % % Gross profit Operating profit Currency tailwinds and return to broad economic growth Includes costs of new German leadership team post NT GmbH disposal Strong demand for contracting and managed services from Netherlands & Belgium Nordics: Record permanent recruitment revenues 14

15 REST OF WORLD CC m m % % Gross profit (8) Operating profit (85) (85) Asia Vietnam impacted by strong US$ Hong Kong closed H1 FY2018, Japan and Australia profitable USA Bad debt write off hides strong underlying results Demand for Digital & Technology West Coast 15

16 Strategy

17 FUTURE OF WORK HN well placed to benefit from investment in automation, robotics, AI LOW RISK Management Technology Engineering Education Arts/ Media Care HIGH RISK Office and admin Sales & marketing Services Production Medical Transportation Around 47 percent of total US employment is in the high risk category. Jobs we expect could be automated over the next decade or two. The Future of Employment, University of Oxford 17

18 FOCUS ON TECHNOLOGY Technology and digital talent in demand Intelligent Automation, Robotics, AI Digital disruption Non-technology Technology +80% of Harvey Nash gross profit by sector by candidate are in the technology / digital sectors UK & I Europe USA Nordics Asia 18

19 CORE PROFIT GROWTH DRIVERS EXECUTIVE KEY REGIONS GROWTH ORGANIC GROWTH ACQUISITIONS UK / Ireland Europe Rest of World Market improving Managed services Strong growth Benelux, Turnaround Germany USA & Asia operating profit improvement Acquisitions - UK Acquisitions - Nordics & Benelux Organic FY18 FY18 FY20 19

20 Current trading and outlook

21 CURRENT TRADING Current year started well UK & Ireland Good start to the year despite IR35 Financial Services in London bouncing back Europe Positive macro economic growth outlook Rest of World USA strong demand in tech, cautious economic outlook Asia Pacific improved profitability despite macro uncertainty, Board confident of profitable growth in the year to Jan

22 Cautionary Statement The information contained in this presentation is not audited, 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 Harvey Nash Group to any registration requirement. Statements in this presentation reflect the knowledge and information available at the time of its preparation. Certain statements included or incorporated by reference within this presentation may constitute forwardlooking statements in respect of the Group s operations, performance, prospects and/or financial condition. By their nature, forward-looking statements involve a number of risks, uncertainties and assumptions and actual results or events may differ materially from those expressed or implied by those 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. Additionally, forward-looking statements regarding past trends or activities should not be taken as a representation that such trends or activities will continue in the future. No responsibility or obligation is accepted to update or revise any forward-looking statement resulting from 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. 22