Thank you for standing by. Welcome to the PeopleIN Limited Investor Conference Call, Fiscal Year 2022 Full Year Results. All participants are in listen only mode. There will be a presentation followed by a question and answer session. If you wish to ask a question, you would either press the star key followed by the number one on your telephone keypad. I would now like to turn the conference over to Mr. Ross Thompson, Chief Executive Officer. Please go ahead.
Thanks very much. Good morning, everyone. Thanks for joining us, and I'm joined here by our CFO, Megan Just. Welcome to our FY 2022 results presentation. PeopleIN is a business built on a simple yet powerful purpose: to inspire excellence in our people. We're only as good as the people we have in the business, which is 850 permanent staff today, and the contractors that we provide to our clients, which on a 12-month period is around 30,000 people. We're a sizable organization, but as I said, it's a purpose that is simple yet powerful. Now I'd like to cover off the key highlights from the financial year and also talk about our outlook moving forward. A record result for us.
We're ahead of guidance, delivering AUD 682.4 million in revenue, which was 53% up on last year, and a normalized EBITDA of AUD 47.2 million, which was 23.9% up on last year. A fantastic result for the business. We also delivered strong organic growth, 15.9% to revenue and 10.5% to normalized EBITDA. Our performance was underpinned by our diverse reach into high demand and defensive employment sectors, including healthcare, professional services, early learning, infrastructure, and food services. I'll touch on this point in more detail later on because it's really key when we talk about our outlook moving forward. Fantastic cash collection for the year. Our conversion was 99.5%. At the half year, you may recall, it was around 91%.
We're up on the half year and really anything that's sort of high 80s, early 90s% is great for our industry, particularly given that we're a growth company and the cash that we need in working capital to continue to drive that growth. Solid performance from the four brands that joined the family in FY 2022. Vision Survey, GMT People, Paragon, and then FIP, who joined in June, and their total contribution for the financial year was AUD 6.6 million. Above our expectations. M&A pipeline remains strong with a focus on healthcare and community and professional services government contracting. With our strong cash collection, we've got balance sheet capacity of around AUD 30 million to execute on a strategic opportunity in financial year 2023.
Operating conditions continued to be positive given the strength of the employment market, 3.4% unemployment at the moment, and an unprecedented demand from clients that are operating in defensive sectors, to the point that they have a summit next year to talk about the talent issue and how to attract more talent into the country. Clearly, we are well-positioned to support our clients with finding that talent moving forward. We launched our three-year strategic plan, which is an evolution on the plans in prior years with a focus on cross-selling, international recruitment, and the continued investment in an international nursing network. Our FY 2023 earnings guidance with normalized EBITDA of between AUD 62 million-AUD 66 million based on the continuation of current economic conditions. I just want you to pick up a couple of points on this slide. First is around EPS.
The 32.3 cents. That's up 19.8% on the prior year. Final fully franked dividend of AUD 0.065. That's AUD 0.13 for the whole financial year, which is up 23.8% on the prior year. A continued strong return on equity of 24.9%. Again, strong organic growth in the business. The EBITDA line, 10.5%, which really takes us to the next slide, where I wanted just to spend a bit of time going through the organic piece, but also touch on our acquisition model. So as we said, at the revenue line, 15.9% organic growth, 10.5% at the normalized EBITDA line. This is real testament to the entrepreneurial culture that is in the business.
That's one of the reasons why I wanted to join the PI family 10 months ago. You know, from our leaders and all of our staff, just that real drive to grow their respective businesses. And I wanted to call out the brands at the bottom of this slide. These are all organic brands. You know, I know it's easy to look at PI and think that every brand we've acquired those, but there's a number of those that we've actually invested in strategic organic initiatives. I'll call out a couple that were established in financial year 2022. That's Next in Health and AWX Executive. Both are permanent recruitment businesses and both performed in the financial year.
Again, it's a strong testament to that entrepreneurial culture within the business and the environment that we create to allow our staff to really push and go above and beyond. But we'll continue to acquire and our acquisition model, I feel from my experience, is a unique one 'cause it's less about integration and more about enablement. How do we enable our acquisition partners, new family members to grow? It's the first discussion we have in DD, is what's your growth plan? What would you need from us to accelerate that growth? You know, just to pick up on an example of Halcyon Knights, joined the family in 2019, and then, you know, three years on, they've more than doubled in size, which is absolutely fantastic to see.
And all of those points, you know, come back to that strong return on equity of 24.9%. Now I'd like to hand over to Megan to go through the financials in a bit more detail.
Thanks, Ross. The annual results for this financial year has continued on the growth pathway that we've been delivering on for the past five years. This growth has been derived from strong organic growth supported by strategic acquisitions. We believe that our financial results demonstrate the diversity of our three verticals and the high demand for employment in the sectors our clients operate ensures that we have the predictability, in the performance and the ability to deliver strong returns to our shareholders. For the current year, revenue is up 53%, EBITDA is up 24%, NPATA is up 28%, and EPS is up 20%. The normalized EBITDA contribution was AUD 47.2 million from revenue of AUD 682 million, being an increase of 24% from last financial year.
We've been able to maintain EBITDA margins of 6.9% as at the first half of this financial year compared to industry averages of approximately 3%. We have seen significant demand for services across all of our divisions this year. Permanent recruitment has shown strong results from our professional services vertical in high-demand roles in both the finance and technology space, while also enabling us to commence two new brands in the other verticals. For our on-hire workforce, there's been significant demand due to our clients struggling to source their own workforce. There has been some impact from COVID restrictions, mainly in the first half of the year. However, they are now experiencing higher volumes given the restrictions have eased. Our four acquisitions during the year have all performed well, contributing AUD 6.6 million in EBITDA to the group since the various acquisition dates.
All are performing as we forecasted or better. The investment that we've placed in our shared services functions earlier in the year enabled these brands to be quickly supported, allowing the incoming management teams to focus on the top-line revenue growth and the integration of these into the PeopleIN group be performed in an efficient and coordinated pace. Cash flows from operations have been outstanding this year, with normalized operating cash flows of AUD 30.8 million. The most significant normalizations relate to the settlement of payroll tax deferrals obtained as a result of COVID, with the final payments occurring during the year of AUD 2.5 million and AUD 5.1 million in relation to the acquisition of Food Industry People Group, which occurred late in the financial year in June.
Our net receipts from customers is AUD 46.9 million compared to normalized EBITDA of AUD 47.1 million, resulting in a 99.5% of our EBITDA being converted into operating cash flows. Normalized operating cash flows were AUD 30.8 million compared to normalized NPATA of AUD 31.9 million. Our dividend declaration of AUD 0.065, being a total of AUD 0.13 for the year, reflects our confidence in our ability to maintain strong cash flow practices and results into the future. Our results are supported by a strong balance sheet. We have communicated in the past that we would increase net debt to 1.5x for the right acquisition, which occurred in June 2022 with the acquisition of Food Industry People Group. This has increased our net debt position to AUD 71.4 million.
The acquisitions of Vision, Paragon, and Food Industry People Group were all funded by commercial bills. With the annualized contribution from Food Industry People Group, the net debt to EBITDA would be 1.1x . We are still in a strong position to undertake future acquisitions. This has been estimated to be approximately AUD 30 million based on maintaining gearing of less than 1.5x EBITDA. Debtor days has improved significantly at 33 days, being a reduction from 47 days. The sophisticated client vetting and methodical debt collection procedures have driven this reduction. Continued focus on the collection of debtors and driving these days down remains a focus, both operational and finance staff collaboratively.
There has been an increase in capital expenditure through this fiscal year, which has come from three main sources, being the acquisition of leases through the entities acquired. The increase in the number of surveyors employed and the corresponding equipment requirement, and then the commencement of our systems upgrade program. This program is to support our investment into our systems and processes to continually improve our service delivery internally. This program of works will continue into the next fiscal year as we roll out across the entire group. I'll now pass back to Ross to provide an update on our strategy and future outlook.
Great. Thanks very much, Megan. So PeopleIN is a broad reach into high demand and defensive employment sectors, which provides mitigation against any potential changes in macroeconomic conditions. There's a lot on the slide, but I did wanna pick up on a couple of key points, and then you'll obviously be able to go through it in a bit more detail. The first on professional services, which our EBITDA mix is 35% tied to professional services with our two major brands there being Halcyon Knights and Paragon, who joined the family in February. When you look at their client base, majority are blue chip, so out of major banks, super funds, or large international tech companies who will continue to invest regardless of what's happening in the sort of macroeconomic challenges. We're not seeing any slowdown in that space.
When you look at what the Australian government have posted recently around the tech sector in particular, then they've announced that commitment, joint commitment with industry to achieve 1.2 million tech jobs by 2030. When you look at professional services broadly and out to 2026, then there's a projection there of an additional 206,000 jobs. We believe where we're positioned with those blue chip clients and also the roles that we are filling and supporting for our clients, you know, they are defensive and they'll continue to be that longer term demand. Looking at health and community vertical. There's a strong demand for nurses globally. You know, Australia is definitely not Robinson Crusoe when it comes to needing more nurses, whether it be Canada, whether it be the U.K., whether it be the U.S.
There is a global long-term demand for nurses. PeopleIN, being one of the largest providers of nurses on the East Coast, again, well-positioned to continue to support our clients to find those nurses in the health sector, in NDIS community space, in aged care. Also looking at how we can leverage our experience internationally to continue to bring those nurses into Australia by setting up and, or continuing to invest in that international nursing network. Also how we leverage our experience now on the PALM scheme with FIP joining the business in June. Also government being very clear in their commentary around diversifying the PALM scheme into health sectors, including aged care. Those are discussions that we are having about how we can leverage our size to support them.
To our third vertical of Industrial and Specialist Services, which between the two, you know, 23% against industrial, 19% against specialist services. This is our most diverse vertical when it comes to sectors, hence highlighting the mix within the ISS division there. And as you can see, a number of the sectors, but sectors that are defensive in nature, you know, whether that be food services, early learning, renewable energy or infrastructure projects, given the government's commitment over the next 10 years to invest in infrastructure across the country. We are working on those projects at the moment, and we will continue to work on those projects.
When you look at the outlook in a number of those sectors, you know, all are showing double-digit growth over the next four years for their requirement to meet the needs that they see with projects and investment that's coming through. So as said, PeopleIN has a broad reach into high demand and defensive employment sectors, which does provide mitigation against any potential changes in macroeconomic conditions. Now, I wanted to share our strategic plan. Again, there is a lot on the slide, so there is a fair amount to digest, but we're also looking at later in the year, setting up an opportunity to take everyone through this in a bit more detail. Probably at the end of October, so we can run through that in detail. Did wanna highlight a few points today.
The first is around our complete talent solution, which we believe is unique to PeopleIN and is a real selling point to our clients. That's made up of four key elements, and it's the wheel that you can see. The first part, that advisory and management. You know, that's about getting in early with our clients and helping them develop their plans and their procedures, et cetera, which in the end, most of the outcomes there are recommendations to our clients that they need more people, whether that be permanent or contracting staff. That's where we pass the baton to our engine room, which is staffing services across the three verticals of healthcare and community, professional services, and industrial and specialist solutions, where we're providing permanent recruitment and contracting services predominantly to our clients. Then the third part, upskilling.
This is about security of candidate supply. Obviously, it's a challenge at the moment in finding people, and, you know, part of this is we'll create that supply by training. Either using our own training organization, Australian Healthcare Academy, for the healthcare vertical, or partnering with training organizations so that when people get trained, we can find them a role, especially into high-demand positions. And in the center is innovation, you know, enabling that innovative thinking to support all of the services that we provide, including technology. You would have seen a couple of months ago, very fortunate to have Vu Tran join the board, excellent director, but also given his experience with Go1, he'll help us navigate that journey, especially over the next three years as we look at technology and what does that mean when we talk about technology-enabled talent services.
Our goal, to be the leaders in the provision of a complete talent solution that enables our clients and candidates to achieve excellence. What does success look like in three years' time? It's that ongoing annual 10% organic growth. Continuing to acquire, so complementary accretive acquisitions. 7%+ EBITDA margin, which would be well beyond industry-leading, which when you look at IBISWorld is around 4%. Leading employer of choice, that employee engagement 80%. 20% of government works are really getting that up, from where it is today, and hence that acquisition focus on professional services contracting for government. Then that global international health network, and then the industry-leading safety compliance. I'll just pick up on a couple of initiatives. I won't go through it all 'cause of time.
Under the people side, we're continuing that laser-like focus on well-being and safety initiatives for our staff, including one employee assistance program for all of our staff, which is 850 today a nd that ongoing awareness training. Under the client side, so, you know, continuing to invest in that global healthcare worker nursing network. Focus on client engagement, so our top clients at the group level, but within each of the verticals as well, and that regular engagement and also identifying key target clients that we wanna focus on. Promoting cross-selling, so the 4,000+ clients that we have, you know, especially when you look at professional services, they all have a need. They all need accountants, they all need IT staff, et cetera.
So being able to cross-sell and introduce Halcyon Knights and Paragon to those clients that our healthcare team's working for or our industrial team's working for and leveraging that goodwill. Grow our defense, federal, and state government advisory and contracting capability. Under innovation, you know, automate low-value processes to maximize high-value human interactions via our systems upgrade program, which is Program Unite. Under shared value, continuing that focus on our three pillars, First Nations, pillar two, sustainability, pillar three, equity and inclusion. I've talked about our defensive sectors and long-term high-demand sectors. I've talked about the strategy for the next three years. What does that mean from an outlook? Low levels of unemployment and higher turnover of our clients' employees continue to drive high demand for recruitment services. Wage inflation is driving high margins for us.
Our diversity of clients and critical demand for services mean that the core business is resilient in times of economic uncertainty. We'll continue to pursue initiatives which address labor supply shortages through international recruitment and upskilling, as well as cross-selling opportunities across our 4,000 client base, as I mentioned earlier. We'll continue to align with the Australian government to work with them, partner with them on how to bolster the country's workforce, including leveraging the footprint, the PALM scheme, to solve critical labor shortages in aged care and community services. Those discussions are ongoing at the moment. We'll continue to reward the strong performance of our people through a competitive performance incentive program. We'll continue to drive a strong cash and cost discipline across the group, including leveraging the scale of the business now. And the M&A pipeline remains strong.
That focus on healthcare, community, and professional services, government contracting. Our balance sheet capacity, you know, as Megan said, for around AUD 30 million to execute on strategic opportunities in FY 2023. To conclude, just to run through the key highlights from the financial year just gone. Record performance at the revenue and profit line. 53% up at the revenue line, 23.9% up at the normalized EBITDA line. Strong organic growth. 15.9% to revenue, 10.5% to normalized EBITDA. Our performance is underpinned by a diverse reach into high-demand and defensive employment sectors, including healthcare, professional services, early learning, infrastructure, and food services. 99.5% of our EBITDA was converted. That's an outstanding result by the team. Absolutely brilliant. Solid performance from our four brands that joined the family in FY 2022.
That contribution of AUD 6.6 million between Vision, GMT, Paragon, and FIP. The pipeline remains strong. As I said, that focus on healthcare and community, professional services, government contracting with around AUD 30 million to execute on any strategic opportunities. Operating conditions continue to be positive given the strength of the employment market and unprecedented demand from clients that are operating in defensive sectors, which is the key, that long-term demand. We've launched our three-year strategic plan, which is an evolution of previous plans, with that focus on cross-selling, international recruitment, and the continued investment in an international nursing network. Our guidance for the new financial year, FY 2023, normalized EBITDA of AUD 62 million-AUD 66 million based on the continuation of current economic conditions. Again, thank you very much, everyone, and we'll move to Q&A.
Thank you. If you wish to, please press star then one on your telephone and wait for your name to be announced. If you wish to cancel your request, please press star then two. If you're on a speakerphone, please pick up the handset to ask your question. Today, our first question comes from Ben Wilson of Wilsons Advisory. Please go ahead.
Thank you very much. Good morning to Ross and Megan. Congratulations on the strong result. I just have a couple of questions. Firstly, a couple of macro questions and then just one on EBITDA margins. Just the macro ones to start with. Just we'd be keen to hear a little bit more from you on job vacancies and inflation. You've spoken a little bit about, obviously record levels of job vacancies at the moment, which is obviously a net positive, notwithstanding the constrained candidate market. There is a lot of speculation, though, about the impact that the RBA tightening cycle will eventually have on the unemployment rate and job vacancies. Just looking to hear your thoughts on how you.
You obviously don't have a crystal ball, but how do you see that playing out for your key focus sectors over the next 12-24 months? Also just regarding inflation, as you said, you're a net beneficiary of wage inflation across your external worker base. But it's a bit harder for you to pass on inflation on your internal workforce. Just wondering what the net impact of wage inflation is like at the moment, and if general inflation across the rest of your expense base is having much of an impact. Thank you.
No, thanks very much for that. As I said, the majority of our sectors are defensive. We are in a good position because regardless of those macro sort of economic potential headwinds, then the majority of our sectors are gonna continue to require staff. That's that long-term demand, whether it be healthcare, whether it be in those sort of professional service space for the blue chip organizations, including global tech businesses. In the industrial side, whether it be food services, whether it be the space or whether it be infrastructure. For us, across the majority, then we see they're gonna continue to need that demand.
To the point that government is holding a summit next week focused on how to bring more people, or one of the key areas will be to how to bring more people into the country. Clearly they believe in those defensive space that there is that longer term demand and the need to bring industry and all parties together to try and come up with a solution for it. As I said, for us over the next 12, 24 months in a majority of the sectors in which we operate, we believe that there is that continued demand there. Clearly, there may be some other areas that we need to react to and we will. Like we've demonstrated in FY 2022 with our results, the diversity of the business will allow us to continue to grow.
And with regard to inflation, I would say there's a net positive benefit with us. We have the 850 employees, and clearly we're managing the salary cost base there. We're also utilizing shares and other elements and bonus schemes, et cetera, to keep that permanent or fixed cost base down. But 850 versus 30,000+ contractors that we have employed at some point during the 12 months. On a weekly basis, we're payrolling now between 10 and 15,000 contractors. As you know, and you alluded to in your question with that, our commercial agreement with clients that if there is a salary increase, then obviously that increases our dollar-for-dollar margin there. We definitely see that being a net benefit to the business. Thanks, Ben.
Our next question comes from Elijah Mayr of CLSA. Please go ahead.
Hi, Elijah.
Good morning, guys. Hey, Ross. Congrats on the result. Just a couple of questions from me. Maybe just starting with the guidance. Can you sort of maybe talk to and break apart, I guess, the organic part and the non-organic part of the guidance? I think historically you've talked to sort of core organic growth in 23 of 10%. Is that still the case or has that changed with-
Yep
our environment?
No, it's, and it's a good question. You look at that AUD 62 million-AUD 66 million, then that's an organic range between 7% and 15%. The middle point would be that 10%.
Yep. Excellent. Did that include expected uplift from PALM or I guess what are the assumptions?
Yeah
you sort of placed into that
Both in the FIP business. You know, as we said at the point of acquiring FIP, that part of this was to have an engine room to support organic growth in other parts of the business, including our healthcare vertical, but also our AWX business. Yes, it does. You know, even the business has been part of the family now for a couple of months, and we have seen some of that benefit start to flow through as well, given it really is an at-scale solution.
With Food Industry People, I think when we chatted around the acquisition that there's an expectation for FY 2023 of revenue of about AUD 220 million. Just looking at the financial statements, it looks like for the last 12 months it is closer to AUD 270 million. What would your expectation be of FIP going into FY 2023?
From expectations from revenue or profit point of view?
Both, if you could. If that sort of changed.
Uh-
from when you took over the business. Because it seems like the revenue was a bit stronger, according to the financial results, than maybe at the point of acquisition.
Yeah. Look for us, we're not gonna go into the specific details against FIP. You know, we have obviously set budgets and other things for the business within the organization, so we don't wanna confuse. But with them, you know, as we said at the time, we would be expecting that growth, so double-digit growth in the business in this financial year and next. Obviously have our line-item notes to that as well.
Maybe just some final financial question. Just with the CapEx expectations, there's obviously a bit of moving parts with some of the acquisitions. Can you maybe give some guidance on CapEx expectations for 2023 and maybe D&A expectations for 2023?
Yeah. I'll pass over to Megan so you can hear another voice.
Hi, Elijah. With the CapEx, the main requirement's going to be with the program of system upgrades. We've spent a bit over AUD 1 million on that in this current financial year. It'll probably tick up to about AUD 3 million in FY 2023. The other acquisitions with the leases, the acquisitions we did this year, they had existing leases in there. We are looking at a bit of a consolidation program there to get our volume of leases down. The other component is the Vision Surveys. They had a significant increase in the number of surveyors that they have, that's a permanent workforce, so each surveyor gets kitted out when they commence.
Given that increase in volume, so look, I don't think that they're going to continue with that same growth that they saw in this financial year in number of employees.
I guess year-over-year, maybe again around that AUD 4 million-AUD 5 million in FY 2023 for CapEx.
Yep.
D&A?
Yeah.
There you go.
Sorry.
There you go.
Sorry.
Yeah.
It just broke up there. Depreciation and amortization. Yeah.
Just so that I'm conscious of the couple of acquisitions that came through at various points in the year. Just looking at a run rate for 2023.
Depreciation will tick up a bit as a result of those leases, particularly the FIP one coming in late in the year. Obviously the amortization will go up slightly, but we are coming towards the end of life for some of those early on with AWX and Edmen, so it won't kind of exponentially go up.
Okay. Thanks.
Thanks, Elijah.
Our next question comes from Liam Schofield of Morgans. Please go ahead.
Morning, guys. Can you hear me clearly?
Morning, Liam. Yeah, I can hear you. It's been breaking up a bit, but yeah, you're fine, mate.
Yeah.
That's good.
Perfect. Two questions. Just on the potential impact of increased migration. Obviously, a lot's been made of that, potentially increasing. Obviously, under the current environment, perhaps some employers are driven more the agency route, plus you've got rate growth playing off against workforce changes. How do you think about those impacts? And secondly, just on the contingent consideration for Halcyon Knights, when do those shares get issued? You know, what do they get issued at? And how does that all work?
Yep. We'll cover off the HK, which I'll pass to Megan to take you through on that. With the migration piece, you know, that is a positive. You know, we flagged at the half year that there was gonna be real focus in the second half on international recruitment, and which we did. One of the key challenges there was visa processing times. So they're still significant. We have started to see them come down in the last month, but what we thought the half year didn't eventuate, particularly when you look at our healthcare and community business. As I said, that's starting to tick up now. To give you a bit of a flavor for that healthcare business, which would be predominantly nurses.
Pre-COVID, we had circa 1,500 nurses that were international nurses as part of our workforce. Since the borders opened, we've built that up to 333, so there's still a gap there to go. There's still a lot of room to get back to pre-COVID for us, but given our focus on international, we wanna obviously surpass that and be that employer of choice for whether it be nurses in Ireland, the U.K., Canada, et cetera. There's a real focus, and you would have seen it, you know, it's a clear flavor in our strategic plan for the next three years around our international side.
In overall, we see that as a positive, obviously, with the summit next week, then, you know, we're having discussions with government, industry bodies and others, you know, around these, you know, particular initiatives, et cetera, to really fast-track that international side because there's such a huge demand there, and it's a long-term demand, from defensive sectors, as we've talked about already this morning. Then on HK.
Just on Halcyon Knights, the final earn-out will be paid probably next week. It's based on a fixed number of shares, per the agreement, which is just a tick over 1 million shares, and it's based on the 10-day VWAP leading into 30 June.
Cool. Thank you.
That's all right.
Great. No worries. Sorry, just on Halcyon Knights. Just to confirm that, those are contingent consideration that is accompanied by an increase in revenue. They're getting paid that amount just because the growth in the business has exceeded what was underwritten at the acquisition.
They had an earnings target, and they've achieved that earnings target. That was for year-on-year target set, and they've achieved those targets for FY 2022.
Right. You know, earn 20%. If you deliver 20% growth, you get X, for example.
There was a fixed earn-out target of an EBITDA that they had to achieve to be entitled to those.
Right. Perfect. Thanks, guys.
Cheers. Thanks, Liam.
Our next question comes from Ian Munro, Ord Minnett. Please go ahead.
Hi, Ross. Hi, Megan. Hi, Tracey. Thanks for taking my question. Just the first one is around Food Industry People, if we can please. Just interested in how that's been tracking since you've taken possession. I guess, what's the likely level of growth into FY 2023, assuming that the PALM scheme just, you know, stays as it is at the moment. Also, how are you seeing the sort of cash collection profile versus some of the other businesses that have been acquired. Thank you.
Yeah. Thanks for that. Cheers, Ian. You know, a few months in, so it's still early days, but definitely on expectations for us. That's going well. Integration is going well there. They are tracking in line with expectations, as I said earlier, for them. The earn-out is double-digit growth is the target for them to achieve. You know, based on the PALM scheme and where it's tracking at the moment, you know, there's plenty of opportunity for them to grow. You know, as we highlighted at the point of acquiring, they've got 19% market share of the PALM scheme. Clearly, since we spoke, you know, government has really been pushing the PALM scheme as one of their major international sort of talent sourcing initiatives, which is great.
Yeah, all good so far, and we're expecting that to continue as well. It's great having them part of the family, a really good leadership team.
Just on the debtors, maybe I'll address that one, Ian. Their debtors is actually quite good at acquisition. We haven't had to do a lot of effort and work there. Their aging is good, and their debtor days is actually bringing the groups down in total. They tend to have seven-day terms on their debtors, and they've got large ones that got good cash flow. No debtor issues.
Thank you. Just maybe one on the macro environment. I take your point on wage inflation and, you know, with the net margin, that's obviously good for revenue rates collected. Just interested in your thoughts on perhaps, you know, the time taken to place candidates at the moment, any trends of contractors versus permanent, and how those two influences, you know, might be pluses or minuses for PPE clients and ultimately your position in the market.
Yeah. It varies across the three verticals as well. When you look at professional services, definitely, a focus on permanent recruitment. Then, you know, if there is any sort of slowdown, you normally see that go from permanent recruitment to contracting, which we have a solid contracting base as well across, the professional services vertical. But definitely a skew to permanent recruitment at the moment. And as I say, that continues to go strong, but something we're closely monitoring. With the industrial and specialist services, you know, the biggest part of the business there is contracting, and it's really just finding people, you know. That's what we flagged with the FIP acquisition. You know, we saw that as an at-scale engine room to help with providing talent to our clients.
You know, we've got a couple of thousand roles that if we had those people tomorrow, we would be able to fill and say PALM will help us, but also we need to look broader than that as well, again, hence why our strategic plan is very focused on that international recruitment for all three verticals. You know, we've talked a bit about healthcare, but it's all three verticals of how we continue to bring in resources from overseas. With healthcare, it's similar in that, you know, we have roles that we're just not filling 'cause we need more people, you know. That's clearly documented that there is a challenge there finding nurses. There is a challenge there to find healthcare workers.
But again, we're one of the biggest players, so we're leveraging our balance sheet in order to really drive that hard and, you know, 333 since the borders opened. Fifteen hundred pre-COVID, so there's still a gap to fill, but we wanna surpass that. That's just with nurses. We'll also look at the PALM scheme as well and how we can bring workers, carers, from the Pacific Islands into aged care and the NDIS community space.
Just within, I guess the 10, circa 10% organic growth rate, you know, year-over-year. We should be sort of thinking of that as holding margin and that really being driven by the top line as well as, I guess, you know, incremental market share growth within the sectors. How do we think about, you know, the earnings capacity of the business at this point in time relative to what you've guided to in FY 2023, and sort of what's the missing piece? I know it's pretty obvious, but just interested to hear it from you, what's the sort of missing piece to get that capacity, or get the actual numbers closer to capacity?
Yeah. As I said, you know, we've called out a number of those initiatives. It's really continuing doing what we're doing. You know, we've flagged the PALM scheme, we've flagged nurses in the U.K. and Ireland, which we historically have brought in nurses from there, you know, 1,500 pre-COVID. It's really just continuing to push hard there. We expect that visa processing times will be quicker. You know, in some cases it's at six months. We wanna get back those down to normal levels of bringing in those skilled workers. There's no huge reform that's needed to be done. It's really around processing times and also some just continued strategic initiatives on that international side, but also upskilling Australians as well into high-demand roles, hence that third part of our talent solution.
From a margin point of view, you know, we flagged 7% margin over that three years. We're at that 6% margin. At this point in time, you know, industry best practice, according to IBISWorld, is 4% for a business of our size and scale. We're well, well beyond that. We wanna hold at that or maintain that 6% as we, you know, invest in the business. Then as we get some of those efficiencies out of systems upgrades and other things, you know, then start to increase that back into the 7%. Clearly, the acquisition of FIP is a big one for us, and it is a lower margin, high volume business compared to professional services and compared to healthcare and community.
You know, that will bring down that margin slightly to, you know, closer to the low 6s%. As I said, we need that engine room to with the PALM scheme to drive organic growth both for them, but also other businesses within the family.
Right. Thanks, Ross. Appreciate it.
Cheers, mate. Thank you.
Our next question comes from [Ken Fisher of Foster Stockbroking] Please go ahead.
Thank you. Good morning, Ross. Good morning, Megan. Great result.
Thanks, Ken.
A couple of questions. Just on, I've got another question around the earn-out. I think there's about AUD 30 million on the balance sheet, about AUD 12 or 13 million is this year. What expectation do you have around a split between cash and scrip for that sort of AUD 12 or 13 million?
The majority of it's cash. Well, except for Halcyon and Knights and a portion of Vision.
Right. Okay. Thank you. That's factored into your balance sheet capacity for future acquisitions of AUD 30 million. Is that right?
Correct.
Yep.
That's correct, Ken. You know, we're very comfortable with our cash discipline, that we've got the facilities and the cash in place to be able to make that acquisition, you know, around that or having that facility to AUD 30 million.
Yep. Excellent. No, that's great. Also, just on the AUD 6.6 million EBITDA contribution from acquisitions in FY 2022, am I right in thinking most of that was Paragon? And if not, what sort of split was there, if we can have that?
Yeah, half was Paragon.
Yep.
We had Vision who were in for the longest period, so that was around the AUD 2 million mark. As you know, GMT was smaller profit business, but was key strategically for us given their exposure to the federal government IT panels and education panels. It's a smaller amount, and then we only had three weeks of FIP.
Yeah. Okay. No, that's great. Thank you. My last question, just around organic brand development. You called out a few brands there. Am I right in thinking that that's a relatively small revenue, probably higher margin than the rest of the business? I'm just curious as to how material those brands can become over the next few years in the context of the overall business.
Yeah, absolutely. You know, a number of them have been ongoing for a while as well. We call them the new ones, so we're focusing on them, you know, Next in Health and AWX Executive. You know, there's no reason over the period they can get, you know, to the size of a Paragon or a Halcyon Knights, you know, over the coming years in that permanent recruitment space. You know, there's definitely capacity for them to grow, you know. You're looking at Timberwolf, which has been in the business for a while. Again, you know, solid performance from those businesses. Given they're organic as well, you know, it's fantastic to see, you know, our staff really driving those forward and generating profit.
You know, like anything, you have an incubator piece, but from my experience over the past 10 months, you know, you set our incubator to say, you know, this is the investment we're gonna make, and most of them outperform and are making profits pretty quickly, which is fantastic.
Yep. No, that's very useful. Thanks very much, Ross. Thanks, Megan.
Cheers. We're probably close to time now, unless there's any further questions.
Our next question comes from Ben Wilson of Wilsons Advisory. Please go ahead.
Yeah, thank you. Sorry, I think we had some connection issues at the end of my earlier question. Thanks, Ross, for your earlier answers. I just had two quick additional ones just on EBITDA margins for the verticals. ISS and Health and Community have probably normalized now back to a more, you know, long-term sustainable level, if equal or better, whereas Professional Services is still probably elevated. Just wondering if you could comment on, you know, the likely trajectory for Professional Services margins going forward. Is it mostly the high level of permanent placements, or are you seeing sort of higher margins than I guess long-term in your contracting business for Professional Services as well? Then just my last question is on corporate costs.
They were sort of pleasingly lower than I expected. That was good there. Just interested in now you've got FIP, Paragon in the mix, are you likely to see an increase in your sort of corporate costs going forward, or is it relatively stable at these levels?
Yeah. Taking that last question first, you know, there's still investment, but nothing significant there. You know, these are things we map out as part of due diligence to say what additional do we need with them in the family. But you know, there's opportunity there to share resources. Yeah, we're not projecting, forecasting any significant increase in any shared services that are needed. From your margin question then, yeah, you get that elevation with the permanent recruitment space. But for us, with Professional Services, it's still that early double-digit margin. Then Healthcare and Community, so in the middle, you know, around that 8%-9%. Then Industrial and Specialist Services, more around that 4%-5%.
Great. Thanks, Ross.
Thank you. Any before.
I would now like to hand it back to Mr. Thompson for any closing remarks.
Great. Well, thank you very much again, everyone, for your time this morning. An absolute pleasure to be able to present our FY 2022 results, and I look forward to catching up with each of you in a bit more detail over the coming days and weeks. Thank you, and have a fantastic day. Cheers. Take care.
Conference is now concluded. Thank you for attending today's presentation. You may now disconnect.