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Albert Ellis, CEO
Mark Garratt, CFO
results ahead of expectations | increased dividend | strong platform to accelerate growth
HARVEY NASH GROUP PLC
HIGHLIGHTS
2
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
STRATEGY
3
Dispose of non-core businesses
Eliminate losses
Focus on strengths
Technology & Digital Talent
Drive growth in key geographies
Market leadership & strong brands
STREAMLINE FOCUS GROWTH
2014 - 2016 2017 - 2022
Financials
INCOME STATEMENT
5
2017 2016
£m £m %
Revenue 784.3 676.5 16
Gross profit 97.9 90.3 8
Operating profit before non-recurring items 9.3 10.2 (8)
Finance costs (0.7) (0.8) (20)
Profit before tax before non-recurring items 8.6 9.3 (7)
Non-recurring items (0.1) (0.2) (48)
Profit before tax 8.5 9.1 (6)
Tax* (2.2) (2.2) (2)
Profit after tax 6.3 6.8 (7)
* Continuing items
Strong revenue growth despite market uncertainties
6% constant currency
FY17 £m
USA bad debts (0.5)
Goodwill (0.1)
Aged accruals 0.5
Total (0.1)
Lower average borrowings
BALANCE SHEET
6
Debtor days reduced to record 38 days (2016: 41 days)
2017 2016
£m £m %
Goodwill & intangibles 55.1 50.7 9
Tangible assets 3.5 3.8 (9)
Net deferred tax 2.8 2.2 28
Long term loan receivable 2.0 1.8 13
Trade & other receivables 128.9 127.3 1
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 5.6 0.2 -
Net assets 62.0 54.1 15
Movement mainly FX
Strong cash generation
FY 2017 H2 cash inflow
Tight control of w/capital
7% reduction, debtor days
CASH FLOW STATEMENT
7
Cash generated from operating activities
2017 2016
£m £m %
EBITDA 10.7 10.8 (1)
Capex (1.1) (2.0) (47)
Interest (0.7) (0.8) (20)
Capitalised software cost - (2.1) (100)
Taxation (2.9) (3.3) (12)
Free Cash Flow 6.0 2.6 137
Working capital 7.3 5.6 34
Acquisitions / disposals (4.6) (4.8) (3)
Loan advanced (2.0) - -
Dividends (2.8) (2.7) 7
Movement in net cash 3.9 0.7 357
After non-recurring items
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
CASH FLOW
8
Strong cash generation, significantly ahead of expectations
8,525
14,404
2,131
7,359 (2,935)
(676)
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
18,000
20,000
Operating
profit
Non-cash
items
Working
capital
Tax paid Interest
paid
Free cash
flow
£ '000 Operating profit to free cash flow
SERVICE LINES
9
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 38.2 34.9 9.6
Contract 38.5 36.0 4.0
Managed Services 9.4 6.7 41.1
Outsourcing 11.8 11.8 0.4
Total 97.9 90.3 8.4
39%
39%
10%
12%
FY17 Gross Profit Split
Perm
Contract
Managed Services
Outsourcing
39%
41%
7%
13%
FY16 Gross Profit Split
FINAL DIVIDEND 2.5p +7.0%
C.A.G.R. 2008-17 9.5%
DIVIDEND COVER 2017: 2.2 x
INCREASING SHAREHOLDER RETURNS
0
5
10
15
20
2012 2013 2014 2015 2016 2017
£m Cash generated from operating activities
0.7 0.8 0.85 0.935 1.025
1.125 1.238
1.36 1.49 1.565
1.1 1.2
1.35 1.48
1.635 1.795
1.974 2.171
2.36 2.525
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Dividend per share (pence) Interim Final
10
Operational Review
Strategy
Industrials Internet of Things
3D printing
Next gen automation
Infrastructure & Transport Uber, car-sharing
Driverless cars
Intelligent transport networks
Financial Investors Crowdfunding
Alternative finance
Energy & Natural Resources Renewables
Smart Grids
Internet of Things Real Estate
Flexible workplaces
Online sales
Consumer Online sales, E-commerce,
Health Monitoring, remote
diagnostics
Financial Institutions Digital Banking
Fintech disrupting of wealth,
trading, lending, forex
Technology and disruption is everywhere, requiring new talent
Dis
rup
tio
n t
hre
at
Digital Innovation
Tech, Media, Telecoms Near extinction of print media
Migration of ad revenue
IP Voice & messaging
@DIGITAL: Our clients need us more than ever
12
UK & IRELAND
13
• 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
2017 2016 CC
£m £m % %
Gross profit 37.0 37.0 (0) (2)
Operating profit 3.0 3.5 (14) (17)
EUROPE
14
• 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
2017 2016 CC
£m £m % %
Gross profit 39.1 32.6 20 6
Operating profit 6.1 5.2 18 3
REST OF WORLD
15
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
2017 2016 CC
£m £m % %
Gross profit 21.8 20.6 6 (8)
Operating profit 0.2 1.5 (85) (85)
Strategy
“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
LOW RISK
Management Technology
Engineering Education
Arts/ Media Care
HIGH RISK Office and admin Sales & marketing Services Production Medical Transportation
FUTURE OF WORK
HN well placed to benefit from investment in automation, robotics, AI
17
FOCUS ON TECHNOLOGY
18
Technology and digital talent in demand
Intelligent Automation, Robotics, AI
Digital disruption
+80% of Harvey Nash gross profit
by sector by candidate are in
the technology / digital sectors UK & I
EuropeUSA
NordicsAsia
Non-technology
Technology
UK / Ireland Europe Rest of World
CORE PROFIT GROWTH DRIVERS
EXECUTIVE GROWTH ORGANIC
Market improving Managed services
Strong growth Benelux, Turnaround Germany
USA & Asia operating profit improvement
KEY REGIONS GROWTH ACQUISITIONS
Acquisitions - UK Acquisitions - Nordics & Benelux
Organic
FY18
FY18 – FY20
19
Current trading
and outlook
CURRENT TRADING
Current year started well
Good start to the year despite IR35 Financial Services in London bouncing back UK & Ireland
Positive macro economic growth outlook
Europe
Rest of World
“…despite macro uncertainty, Board confident of profitable growth in the year to Jan 2018…”
USA – strong demand in tech, cautious economic outlook Asia Pacific – improved profitability
21
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 “forward-
looking 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