1q 2017 management presentation - work service · -it kontrakt h1’17: as it kontrakt sale...
TRANSCRIPT
E X P E R T A N D S T R AT E G I C H R A D V I S O R 1
WORK SERVICE GROUP1Q 2017 Management Presentation
E X P E R T A N D S T R AT E G I C H R A D V I S O R 2
Statement of Comprehensive Income1Q 2017 vs. 1Q 2016
Source: The Company
Comments
Revenues grew by 11%, with 2nd best quarterly sales in Group history. It’s the resultof development of existing customers as well as new customers gained in previousperiods. Such strong growth was possible due to improved effectiveness ofrecruitment and development of new sources of candidates.
At the same time operating costs grew by 9%, almost 20% slower dynamic thanincrease in sales. Achieved results are driven by efficiency factors in all operationalfields of Group activities.
Thanks to improved cost structure and margin increase on demanding candidate’smarket, profit on sales grew by record 74% proving effectiveness of actionsundertaken in last FY by Management Board.
Both EBIT and Net Profit are best proof of results, exceeding Q1’17 outlook providedby Management Board . After ¼ of the year, 29% of the EBIT Guidance for the entireyear (85m PLN) has already been delivered.
Specification [t PLN] 1Q 2016 1Q 2017Dynamic
2017/2016
Revenues 591 248 655 062 10,8%
Net revenues from sales of products 591 974 655 429 10,7%
Variation in stocks of products -735 -368 -49,9%
Manufacturing cost of products for entity's own purposes
Net income on sale of goods and materials 9 -100,0%
Operating costs 576 161 628 836 9,1%
Depreciation 3 711 4 119 11,0%
Consumption of materials and energy 2 735 4 214 54,1%
Outside services 71 701 108 713 51,6%
Taxes and charges 1 517 514 -66,1%
Remuneration 388 273 405 297 4,4%
Social insurance and other benefits 93 099 95 818 2,9%
Other generic expenses 15 126 10 161 -32,8%
Value of goods and materials sold
Profit (loss) on sales 15 087 26 226 73,8%
Other operating incomes 4 749 4 498 -5,3%
Other operating costs 3 160 5 506 74,2%
Profit (loss) on operating activities 16 677 25 218 51,2%
Financial incomes 1 361 1 579 16,0%
Financial costs 9 000 9 936 10,4%
Gross profit (loss) 9 037 16 861 86,6%
Income tax 4 797 4 466 -6,9%
Net profit (loss) 4 240 12 395 192,4%
Net profit (loss) 4 240 12 395 192,4% !
E X P E R T A N D S T R AT E G I C H R A D V I S O R 3
Comments
Revenue [m PLN]
Record high 1st quarter with historic 25m PLN EBIT achieved. Q1’17 Outlook exceeded by ~3m PLN.
Topline growth of 11% is in line with market growth, however Group dynamic is diluted by decreased sales in WS Germany (92% vs. YA) and WS Russia (91% vs. YA). Allother Business Units are growing. Champions of vs. YA dynamics: WS Czech 133%, IT Kontrakt 130%, Exact Systems 128%, Antal 115%, WS Poland +110%.
Recent acquisitions (FY2015) also prove positive trends: Hungarian domestic acquisition 127%, CRS (Exact Systems) 123% and WS Balkans 122%.
Capital Group ResultsRevenue and EBIT
EBIT [m PLN]
Source: The Company
188,7 345,9 474,5 591,9 655,1 221,4
390,0 502,6
611,3
238,8
488,3
548,8
616,0
269,5
515,6
610,8
660,6
-
500,0
1 000,0
1 500,0
2 000,0
2 500,0
3 000,0
2013 2014 2015 2016 2017
Q1 Q2 Q3 Q4
9,1 16,2 16,3 16,7
25,2 8,5
16,2 16,6 15,5 11,2
21,1 25,3 22,9 19,2
35,6 33,3
8,0
-
10,0
20,0
30,0
40,0
50,0
60,0
70,0
80,0
90,0
100,0
2013 2014 2015 2016 2017
Q1 Q2 Q3 Q4
E X P E R T A N D S T R AT E G I C H R A D V I S O R 4
Scale of our Operations
COMMENTS
Total Group employment level exceeded 44k FTE,which is 11% higher vs Q1’17 and 13% more thanFY2017 average employment.
Record high results in:- Poland +9% vs. FY2017 average- Central Europe +9% vs. FY2017 average- Balkans x2.5 vs. FY2017 average
Stabilized situation in Germany.
Long term declining trend in Russia.
1Q'13 2Q'13 3Q'13 4Q'13 1Q'14 2Q'14 3Q'14 4Q'14 1Q'15 2Q'15 3Q'15 4Q'15 1Q'16 2Q'16 3Q'16 4Q'16 1Q'17
ASIA (CHN) - - - - - - - - - - - - - - - 2 20
WESTERN EUROPE (GB, BE) - - - - - - - - 19 38 134 118 147 156 166 154 196
BALKANS (RO, SLO, CRO, TR) - - - - 74 86 134 222 186 191 261 1 165 1 274 1 378 1 355 1 450 3 382
RUSSIA 1 822 1 220 1 365 1 392 1 790 1 505 1 560 1 377 1 297 1 209 1 326 1 245 778 594 404 425 458
GERMANY 217 378 402 464 437 478 2 828 2 231 2 396 2 207 2 457 1 991 1 930 1 884 2 032 1 856 1 908
CENTRAL EUROPE (CZ, SK, HU) 627 1 393 1 650 1 710 7 127 7 576 8 563 7 184 9 268 9 615 10 222 8 258 10 323 10 090 9 679 8 124 10 426
POLAND 12 983 15 320 16 844 17 526 19 641 19 383 21 530 18 574 22 598 22 332 26 291 24 216 25 597 26 871 27 055 23 130 28 025
-
5 000
10 000
15 000
20 000
25 000
30 000
35 000
40 000
45 000
50 000
POLAND CENTRAL EUROPE (CZ, SK, HU) GERMANY RUSSIA BALKANS (RO, SLO, CRO, TR) WESTERN EUROPE (GB, BE) ASIA (CHN)
E X P E R T A N D S T R AT E G I C H R A D V I S O R 5
Financial Ratios1Q 2017 vs. 1Q 2016
Comments
All profitability ratios improved based on cost optimization,improved efficiency and margins.
No changes in liquidity ratios as portfolio of contracts andmarket conditions remain stable.
Higher absolute value of debt drives financial costs increaseby 10%, however Debt/EBITDA Ratio remains the same as thelevel reported in last period (Q4’16).
Source: The Company
Financial ratios 1Q 2016 1Q 2017Change
2017-2016
Profitability ratios
Profit on Sales Margin 2.55% 4.00% +1.45 p.p.
EBIT Margin 2.82% 3.85% +1.03 p.p.
EBITDA Margin 3.45% 4.48% +1.03 p.p.
NP Margin 0.72% 1.89% +1.17 p.p.
ROA 0.39% 0.95% +0.56 p.p.
ROE 1.27% 3.44% +2.17 p.p.
Liquidity ratios
Cash conversion cycle 45 44 -1
Turnover ratios
Turnover of receivables ratio 47 47 0
Turnover of liabilities ratio 7 8 +1
Debt ratios
Net Debt / EBITDA 2.85 3.22 +0.37
E X P E R T A N D S T R AT E G I C H R A D V I S O R 6
Statement of Cash Flow1Q 2017 vs. 1Q 2016
Comments
• Cash flows from operating activities remainscomparable to previous year.
• Outflows from investing activities are related toFiege JV (Work Service Germany) 2nd earn outtranche payment in Q1’17.
• Positive cash flow from financing activities is aresult of +55m PLN new debt facility from PKO BPand 25m PLN redemption of series Q bonds.
Source: The Company
As at Mar 31st [t PLN] 2016 2017
Net profit (loss) 1 699 6 612
Total adjustments 15 024 10 067
Cash flows from operating activities 16 723 16 679
Inflows 537 495
Outflows 6 873 44 425
Cash flows from investing activities -6 336 -43 930
Inflows 714 57 714
Outflows 19 299 25 117
Cash flows from financing activities -18 585 32 596
Increase (decrese) of cash and its net equivalents -8 199 5 346
Cash balance at the begining of the period 57 904 104 615
Cash balance at the end of the period 49 706 109 961
E X P E R T A N D S T R AT E G I C H R A D V I S O R 7
Balance Sheet1Q 2017 vs. 1Q 2016
Source: The Company
As at [t PLN] Dec 31st 2016 Mar 31st 2017
FIXED ASSETS 669 786 663 527
Intangible assets 61 126 60 916
Goodwill 549 644 543 056
Tangible fixed assets 31 207 31 397
Real property investments 1 615 1 528
Other financial assets 25 25
Other long-term assets 4 309 4 330
Other long-term financial assets 2 893 1 928
Deferred tax assets 18 157 19 636
Prepayments 811 712
CURRENT ASSETS 631 101 642 298
Inventory 28 342 23 583
Trade and other receivables 432 903 436 064
Other financial assets 29 236 34 345
Other short-term assets 9 351 9 407
Cash and other pecuniary assets 104 615 109 961
Prepayments 26 653 28 939
TOTAL ASSETS 1 300 887 1 305 825
As at [t PLN] Dec 31st 2016 Mar 31st 2017
EQUITY 357 297 360 217
Share capital 6 509 6 509
Supplementary capital 330 652 333 254
Capital from the valuation of options -53 774 -53 774
Net profit (loss) 2 418 6 612
Exchange rates balance -5 277 -15 683
Minority Interest 76 769 83 299
LIABILITIES AND PROVISIONS FOR LIABILITIES 943 590 945 608
Long-term liabilities 342 551 412 861
Long-term credits and loans 125 543 196 239
Deferred income tax liabilities 3 033 4 735
Other provisions 1 762 1 738
Other liabilities 212 212 210 150
Short-term liabilities 601 039 532 747
Trade and other liabilities 472 498 416 512
Short-term credits and loans 96 183 82 618
Other provisions 32 358 33 617
TOTAL LIABILITIES 1 300 887 1 305 825
E X P E R T A N D S T R AT E G I C H R A D V I S O R 8
3. 2017 GUIDANCE
E X P E R T A N D S T R AT E G I C H R A D V I S O R 9
2017 EBIT
GUIDANCE
85 351T PLNCOMMENTS
2017 EBIT GUIDANCE
Work Service Management Board decided to issue 2017 EBIT Guidance, including following conditional Group Structurechanges:
- IT Kontrakt H1’17: as IT Kontrakt sale transaction has already been announced, the Guidance reflects H1’17 IT Kontraktconsolidated into Group results.
- Work Service Russia whole FY: as Management Board strategically decided to disengage from Russian market, processof selling Russian entity core business has been started. Nevertheless, so far whole year of Work Service Russia EBITbudget is reflected in Guidance.
The Guidance will be adjusted conditionally when the above Group changes occur. The Guidance is 35% higher thanreported 2016 EBIT. Announced number is a minimum budget to be delivered in FY17 (this minimum threshold has to bereached in order for the Management Board to receive the 2017 annual bonus).
Despite Exact Systems IPO being postponed (strategic decision to engage in a Dual Track process) 2017 EBIT Guidancekept unchanged based on the very strong Q1’17 Group Results.
EBIT [t PLN] 2016 Actuals 2017 Guidance
2016 Scope of Businessincluding IT Kontrakt whole fiscal year’s results, no other changes
63 049 88 031
Including Group Structure Changesexcluding IT Kontrakt H2’17 results
n/a 85 351