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Matchtech Group plc Preliminary Results Presentation October 2008

Matchtech Group plc Preliminary Results Presentation October 2008. Agenda. Year Highlights Financial Review Operational Review Strategy & Outlook. Highlights. Record turnover and profits Over 20% organic net fee income growth across every sector

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Matchtech Group plc Preliminary Results Presentation October 2008

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  1. Matchtech Group plcPreliminary Results PresentationOctober 2008

  2. Agenda • Year Highlights • Financial Review • Operational Review • Strategy & Outlook

  3. Highlights • Record turnover and profits • Over 20% organic net fee income growth across every sector • Healthy balance of Contingency, Preferred and Master Vendor business • Maintained good net fee income mix – contract 67%, permanent 33% • Permanent fees up 28%, permanent placements up 31% • Contract net fee income up 21%, contractors working at year end up 11% • Sales force headcount up 26% • Final dividend of 10.6 pence per share up 14% • Total dividend for 2008 of 15.6 pence per share up 14% • Seeking shareholder approval at the AGM to buy back up to 10% of the share capital • Overall continuing strong demand for permanent and contract candidates • Well positioned to respond quickly and effectively to changing conditions • Overall trading in the first two months of 2009 has been good with net fee income up 13% on last year and contractor numbers up 5% since end July

  4. 2008 Financial ReviewTony Dyer, Group Finance Director

  5. Income Statement (before non-recurring items*) Reported under IFRS * 2007 results exclude the sales and profits from the US business sold on 31 August 2006 as well as the non-recurring costs of the IPO of £0.6m

  6. Income Statement – Half Year Splits (before non-recurring items*) * 2007 results exclude the sales and profits from the US business sold on 31 August 2006 as well as the non-recurring costs of the IPO of £0.6m

  7. Income Statement (earnings per share)

  8. Balance Sheet

  9. Cashflow

  10. Historical Performance NFI Growth NFI Conversion Diluted EPS Growth Operating Cash Conversion

  11. 2008 Operating ReviewAdrian Gunn, Group Managing Director

  12. Consistent growth across all three sectors Re-signed key Master Vendor contracts First Automotive Master Vendor win at Ricardo Maintained spread of clients over 1,500 clients across all sectors 54% of NFI spread across top 50 clients Achieved BS25999 Business Continuity accreditation Technology enhancements driving operational efficiencies Operational Highlights

  13. Contractor/Perm split of NFI: 67:33 (2007: 69:31) Gross margin 12.8% (2007: 13.3%) Operating profit conversion rate 41.6% (2007: 42.0%) 4,902 contractors working (at period end) (2007: 4,408) 2,868 perm placements (2007: 2,192) £3,807 average perm fee (2007: £3,888) Sales force head count (at period end) 209 (2007: 166) Operational Highlights 2008 Net Fee Income Support Services22% (2007: 22%) Engineering & Science 51% (2007: 56%) Built Environment27% (2007: 22%)

  14. Operational Highlights

  15. Engineering Sector 2008 (51% of NFI) • Contractor/Perm split of NFI: 73:27 (2007: 76:24) • Gross margin 11.3% (2007: 11.5%) • Net fee income conversion rate 44.6% (2007: 44.1%) • 2,764 contractors working (at period end) (2007: 2,646) • 1,109 perm placements (2007: 842) • £4,019 average perm fee (2007: £3,969) • Sales force head count (at period end) 97 (2007: 85) 2008 Net Fee Income 29% Oil & Gas 21% Electronics and Software Systems 19% Aerospace 11% Automotive 11% Marine 5% Pharmaceutical 2% Power & Nuclear 2% Food

  16. Engineering Sector Highlights • Key Clients • Babcock Marine, BVT Surface Fleet, VT Group,ExxonChemical and Ricardo • New & Developing Business Streams • Controls & Automation • Pharmaceutical & Food • Power & Nuclear • Telecoms & Broadcast • Market Forces • Continued strong demand for both permanent and contract staff • Candidate shortage across the board • Contract percentage margin under some pressure

  17. Built Environment 2008 (27% of NFI) • Contractor/Perm split of NFI: 73:27 (2007: 72:28) • Gross margin 13.0% (2007: 13.4%) • Net fee income conversion rate 44.4% (2007: 44.4%) • 1,289 contractors working (at period end) (2007: 1,130) • 635 perm placements (2007: 507) • £3,874 average perm fee (2007: £3,753) • Sales force head count (at period end) 55 (2007: 39) 2008 Net Fee Income 22% Traffic & Transportation 22% Highways 20% Water 14% Building Structures 10% Building Services 7% Architecture 5% Site

  18. Built Environment Highlights • Key Clients • Mouchel Group, Transport for London, Arup, Atkins, WSP and Severn Trent Water • New & Developing Business Streams • Environmental • Geo-Technical • Rail Infrastructure • Traffic Planning • Market Forces • Architecture, Building Services and Building Structures seeing a slowdown in permanent recruitment • Highways, Traffic and Transportation and Water continue to see high demand for contract staff

  19. Support Services 2008 (22% of NFI) • Contractor/Perm split of NFI: 46:54 (2007: 46:54) • Gross margin 18.1% (2007: 18.1%) • Net fee income conversion rate 30.1% (2007: 33.9%) • 849 contractors working (at period end) (2007: 632) • 1,124 perm placements (2007: 843) • £3,560 average perm fee (2007: £3,888) • Sales force head count(at period end) 57 (2007: 42) 2008 Net Fee Income 26% Procurement & Supply Chain 21% IT Private Sector 15% IT Solution Providers 11% Education 9% HR & Finance 9% Sales & Marketing 9% IT Public Sector

  20. Key Clients VT Education & Skills, NHS, Transport for London, Mouchel Group, British American Tobacco New and developing business areas Executive Appointments HR Finance Education Market Forces Continue to focus on up selling to Matchtech’s key Engineering and Built Environment clients Targeting public sector clients Permanent recruitment slowdown in IT Solutions Support Services Highlights

  21. 1997-2008 NFI CAGR of 22.4%

  22. Maintaining Strategy for Long Term Growth • Continuing to build on a successful business model with strong defensive characteristics • Broad spread of clients and markets • Keeping a healthy balance of Contingency, Preferred and Master Vendor relationships • Maintaining contract and permanent mix that delivers strong net fee income conversion • Maintaining a low cost base through our ‘single site’ strategy • Developing IT systems that continually improve service delivery and drive efficiencies • Increasing staff productivity through training and development • Increasing our market share within each sector through organic growth • Focusing on long term publicly funded projects • Expanding our geographical reach within the UK • Selectively following key clients overseas • Maximising revenue from existing clients • Diversifying the skill types placed by our Support Services sector

  23. Outlook 2008/09 • Visibility • Skill shortages continue to fuel demand for technical staff • Long term growth drivers on key projects • Strong pipeline of business development targets • Slow down in demand evident in specific pockets • Well positioned to respond quickly and effectively to a deterioration in market conditions • Redeployment of staff to busier sectors • Growth based commission schemes • Tight cost control • Active performance management

  24. Appendices

  25. Leading technical recruitment firm, with: Strong track record of organic NFI and profit growth Experienced management team; good staff retention Resilient, contractor-driven business with effective perm strategy Broad spread of clients and sectors, with many long-standing relationships Targeting sectors with long-term investment horizons Efficient systems, covering the UK from a single site with considerable operational flexibility Balance provides stability, growth and cash generation for shareholders Investment Summary

  26. Matchtech • Balanced • Sectors • 1,500 Clients • Master Vendor / PSA / Contingency • Contract / Perm • Efficient • Good staff retention • Home grown graduates • Single site communication and control • Advanced, integrated IT systems

  27. Geographical Coverage Head Office 30,000 sq ft The diagram represents the geographical coverage of contractors in 2008

  28. Business Relationships Managed Service Relationship Preferred Supplier Relationship Contingency Recruitment

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