Skilled Group

1. Industry Analysis

1.1 Company profile

Skilled Group Ltd (SKE, Skilled Engineering) is categorised in Commercial & Professional Services sector of industry. It has been operating since 1964 and listed on the ASX in 1994, aimed at providing contract labour services to industry, commerce and government, in Australia and New Zealand. Skilled tradesmen and professionals are supplied to a wide range of Australian industries including engineering, drafting, maintenance and communications disciplines. The company focuses on three main business operating divisions comprising Staffing Services, Engineering and Marine Services, Business Services.

The Staffing Services division

• SKILLED (blue collar labour hire)

• TESA (coal mining labour hire)

• Swan Contract Personnel (technical and engineering professionals)

• Extraman (mining and resources labour hire)

• Mosaic (white collar recruitment)

• Origin Healthcare (healthcare para-professionals)

• PeopleCo (local recruitment for small to medium enterprises)

The Engineering and Marine Services division

• Offshore Marine Services (offshore oil and gas manning business)

• ATIVO (maintenance and project services)

The Business Services division

• Excelior (customer call centre and business process outsourcing)

• SKILLED Shared Services (back office processing)

1.2 The economical environment

Interestingly during Global Financial Crisis (GFC) from 2007 to now, the Australian jobless index has been stable at 4 to 6 per cent. (APPENDIX1) Ai Group research indicated that 40 per cent of companies chose to reduce working hours and minimise other costs rather than cutting staff, therefore, preventing job losses. Even though companies protected their internal employees, they chose not to hire outsourced temporary staff when trading conditions deteriorated. After the labour hire firms had a challenged period, the forecast for the industry looks better with steady signs of improvement as the economy is recovering.

Although the Company expected that business rebounds quickly following a downturn, because companies need immediate access to labour, Skilled Group still suffered a 55 per cent fall in 2010 annual profit to $12.7 million, and no final dividend was declared. The Company explained that its performance was affected by a slower recovery of