SThree plc · LSE:STEM
SThree — FY2010 Earnings Presentation
52 slides from SThree's earnings presentation, February 2011
Slide 1: Preliminary Results 2010
Preliminary Results 2010 Preliminary Results Presentation Prelim Results for Results Prelim the yearfor ended 28 November the year ended 28 2010 November 2010 www.SThree.com SThree plc 1
Slide 2: SThree Profiles
Preliminary Results 2010 SThree Profiles Prelim Results for the year ended 28 November 2010 Russell Clements — Chief Executive Officer Russell has served as SThree’s Chief Executive Officer since 2004 having previously held the position of Deputy Chief Executive Officer since 2001. He joined Compute
Slide 3: Introduction & Overview
Preliminary Results 2010 Prelim Results for the year ended 28 November 2010 Introduction & Overview www.SThree.com SThree plc 3
Slide 4: Key facts
Preliminary Results 2010 Key facts Prelim Results for the year ended 28 November 2010 • Founded in 1986, floated in 2005 • 100% organic growth through multi brand model • Pure play specialist staffing – average perm salary £47k, contract pro rata £90k • 52 offices, 30 non UK, 60% of GP international
Slide 5: Full Year 2010: An Overview
Preliminary Results 2010 Full Year 2010: An Overview Prelim Results for the year ended 28 November 2010 • A very satisfactory performance for the year • PBT up 20.0% to £21.6m (2009: £18.0m), slightly ahead of consensus • Greater geographical diversification, with non-UK share of gross profit at 60%
Slide 6: Full Year 2010 Financial Highlights
Preliminary Results 2010 Full Year 2010 Financial Highlights Prelim Results for the year ended 28 November 2010 Actual LFL 2010 2009 growth growth Revenue £474.5m £519.4m -8.6% -7.5% Gross profit £166.4m £171.2m -2.8% -1.6% Operating profit* £21.2m £18.0m +17.8% +20.7% Conversion ratio* 12.8% 10.5%
Slide 7: UK Offices
Preliminary Results 2010 22 UK Offices Prelim Results for the year ended 28 November 2010 y London • Birmingham SThree HQ Computer Futures SThree Group Training Progressive SThree Group Finance Huxley SThree Group IS Real Staffing Group Computer Futures Real Staffing Group • Leeds IT Job Board Real
Slide 8: Non-UK Offices
Preliminary Results 2010 30 Non-UK Offices Prelim Results for the year ended 28 November 2010 New Offices opened in 2010: Existing office locations: y Perth y Amsterdam y Frankfurt y New York ¾ Progressive ¾ Computer Futures (2000) ¾ Computer Futures (1999) ¾ Huxley (2006) / Real ¾ Progressive (2002
Slide 9: KPIs and Business Analysis
Preliminary Results 2010 Prelim Results for the year ended 28 November 2010 KPIs and Business Analysis www.SThree.com SThree plc 9
Slide 10: Key Performance Indicators: Permanent
Preliminary Results 2010 Key Performance Indicators: Permanent Prelim Results for the year ended 28 November 2010 Growth in Permanent Placement Volume Growth in Permanent Average Fee +3.4% 12,000 £14,000 12,123 12,340 10,236 11,930 £12,000 10,000 9,568 10,355 9,780 £10,000 8,000 7,685 +8.1% 8,563 6,
Slide 11: Key Performance Indicators: Contract
Preliminary Results 2010 Key Performance Indicators: Contract Prelim Results for the year ended 28 November 2010 Growth in Contract Runners Growth in Gross Profit Per Day Rate 7,000 +1.1% £90.0 £85.7 £84.7 £84.2 6,000 5,662 5,745 £80.0 £78.3 +4.9% £71.4 5,000 4,719 £70.0 £64.9 4,359 4,157 £60.0 4,00
Slide 12: Gross Profit & Gross Margin
Preliminary Results 2010 Gross Profit & Gross Margin Prelim Results for the year ended 28 November 2010 Gross Profit (£m) Gross Margin % +2.0% pts 250 40% 218.9 35.1% 34.5% 34.9% 34.7% 35.0% 35% 33.0% 200 182.7 30% 171.2 168.5 166.4 150 25% 135.5 20% 100 15% 10% 50 5% 0 0% FY 2006 FY 2007 FY 2008 FY
Slide 13: Historical Operating Profit & Conversion Ratio
Preliminary Results 2010 Historical Operating Profit & Conversion Ratio Prelim Results for the year ended 28 November 2010 Operating Profit (£m) Conversion Ratio (operating profit as a % of gross profit) 35% 30.3% 60 56.8 30% 28.6% 28.2% 52.3 25.9% 50 25% 22.9% 22.0% 41.0 40 20% 29.5 15.3% 30 27.5 1
Slide 14: Geographic Analysis by Location of Client
Preliminary Results 2010 Geographic Analysis by Location of Client Prelim Results for the year ended 28 November 2010 Gross Profit Growth by Region 11% 2010 120% 100% 94% 40% 20% 80% UK 60% 46% Benelux 40% France 7% Germany 20% FY2010 FY2009 ROW 0% -4% -7% 22% -20% -13% £166.4m -40% -37% 6% 2009 -60
Slide 15: Permanent/Contract Analysis
Preliminary Results 2010 Permanent/Contract Analysis Prelim Results for the year ended 28 November 2010 Gross Profit Growth In Permanent/Contract GP 2010 20% 24?? 15% 13% 49% 51% 10% FY2009 5% 0% Perm -5% Cont -10% £166.4m -15% -14% -13% -20% 2009 -25% FY2010 -30% -35% -32% 42% Perm Cont 58% Gross m
Slide 16: Sector Analysis by Candidate Skillset
Preliminary Results 2010 Sector Analysis by Candidate Skillset Prelim Results for the year ended 28 November 2010 Gross Profit Growth In ICT / Non ICT GP 6% 5% ICT 2010 6% Engineering & Energy 40% Banking 31% 10% 30% Accountancy & Finance 20% Pharma 62% 11% 10% Other & Advertising Income 0% -4% £166
Slide 17: Business breakdown by client industry sector
Preliminary Results 2010 Business breakdown by client industry sector Prelim Results for the year ended 28 November 2010 Other Other Financial Services 6% Financial Services 6% ICT 5% ICT 6% 19% 22% Commodities Commodities 8% 8% Retail & Consumer Retail & Consumer Goods Goods 3% 4% Investment Public
Slide 18: Sales Headcount
Preliminary Results 2010 Sales Headcount Prelim Results for the year ended 28 November 2010 Total -28% Total +17% Total +11% UK -42% UK +10% 1,684 Int’l -10% UK +3% Int’l +25% Total +6% Int’l +18% Total -10% UK +5% Vs. year end 2009 UK -16% Vs. year end 2009 Int’l +6% Int’l -5% 1,279 1,308 714 1,206
Slide 19: 2010 Financial Results
Preliminary Results 2010 Prelim Results for the year ended 28 November 2010 2010 Financial Results www.SThree.com SThree plc 19
Slide 20: Income Statement
Preliminary Results 2010 Income Statement Prelim Results for the year ended 28 November 2010 2010 2009 2009 2008 Actual LFL £m m£ £m m £ growth Growth Revenue Revenue 519.4 474.5 631.5 519.4 17.8% - -8.6% -7.5% 23.1% - Gross Gross profit profit 171.2 166.4 218.9 171.2 21.8% - -2.8% -1.6% 27.9% - Ope
Slide 21: Balance Sheet
Preliminary Results 2010 Balance Sheet Prelim Results for the year ended 28 November 2010 Balance Sheet 28 Nov 29 Nov £20m invoice discounting facility with RBS until April 2012 £m 2010 2009 • £20m committed Goodwill & intangibles 10.2 10.9 • Base rate +175 bp Property, plant & equipment 5.4 5.4 Def
Slide 22: Cash Flow
Preliminary Results 2010 Cash Flow Prelim Results for the year ended 28 November 2010 2010 2009 £m £m Operating profit after exceptional items 21.2 8.9 Depreciation and amortisation 6.3 6.1 Share awards charge, asset write offs, other non cash items 2.3 3.4 (Increase)/decrease in receivables (3.7) 5
Slide 23: Earnings Per Share
Preliminary Results 2010 Earnings Per Share Prelim Results for the year ended 28 November 2010 2010 2009 Change % Profit After Tax* £14.3m £12.4m +15.3% Minority Interest** -£0.1m -£1.1m Profit attributable to equity holders of the company £14.2m £11.3m +25.7% Weighted average number of shares for b
Slide 24: Summary & 2011 Outlook
Preliminary Results 2010 Prelim Results for the year ended 28 November 2010 Summary & 2011 Outlook www.SThree.com SThree plc 24
Slide 25: Contract Runners – H1 year comparison
Preliminary Results 2010 Contract Runners – H1 5 year comparison Prelim Results for the year ended 28 November 2010 Indexed Contract Runners - H1 5 Year Analysis (Annual Trend based on Nov Year End Runners) 120% 109% 110% 104% 100% 100% 97% 93% 90% 80% 77% 70% 60% 50% 40% November December January F
Slide 26: Business mix - a transformation
Business mix - a transformation Preliminary Results 2010 Prelim Results for the year ended 28 November 2010 2010 2009 2008 24% 31% 41% 59% 69% 76% UK, ICT Gross Profit Other sectors and geographies Continued geographical & sector diversification derisks our business, longer established sectors/geogr
Slide 27: Summary & 2011 outlook
Preliminary Results 2010 Summary & 2011 outlook Prelim Results for the year ended 28 November 2010 • All markets now improving and in growth • Selective rehiring undertaken +17% headcount increase year on year • Strong Q4 performance gives us a solid platform for 2011 • 2011 planned to be a further
Slide 28: The Future of SThree
Preliminary Results 2010 Prelim Results for the year ended 28 November 2010 The Future of SThree www.SThree.com SThree plc 28
Slide 29: SThree: Evolving the Multi Brand Model
Preliminary Results 2010 SThree: Evolving the Multi Brand Model Prelim Results for the year ended 28 November 2010 Niche Specialisations ICT Banking 27% Engineering & Energy 27% Accountancy & Finance Pharma / Healthcare 23% Sales & Marketing 23% Brand % of 2010 Group GP SThree has grown 100% organic
Slide 30: Two types of specialist staffing market
Two types of specialist staffing market – Preliminary Results 2010 defined by candidate mobility Prelim Results for the year ended 28 November 2010 ncy n g oun ta n ki Ac c Ba nking Ba a s T . als G . & t i c I.C il a ceu Pha r m as O i c als & G eu t Oil c H . R . Ph arm a Local Global Global candi
Slide 31: Profile of International Growth
Preliminary Results 2010 Profile of International Growth Prelim Results for the year ended 28 November 2010 The Group’s expansion has four major dimensions: Increase headcount in an existing office in an established sector e.g. Munich ICT Increase headcount in an existing office into a newer sector
Slide 32: Planned & potential office openings 2011/12
Preliminary Results 2010 Planned & potential office openings 2011/12 Prelim Results for the year ended 28 November 2010 Doha Chicago Antwerp Melbourne Zurich Moscow Sao Paulo Mumbai Abu Dhabi Shanghai Rio de Janeiro Approved Pending approval Subject to business case Opportunity to leverage existing
Slide 33: Business Mix
Preliminary Results 2010 Business Mix Prelim Results for the year ended 28 November 2010 Geographical Mix Geographical Mix Indicative Future Mix 2009 2010 (c. 5 years) 6% 11% 23% 30% 40% 45% 49% 49% 47% UK Europe ROW 2010 ROW represents 11% of Group mix Source: SThree Internal Analysis www.SThree.co
Slide 34: Indicative Future Footprint
Preliminary Results 2010 Indicative Future Footprint Prelim Results for the year ended 28 November 2010 Americas UK & Ireland Europe Middle East & Africa AsiaPac New York Calgary London Düsseldorf Paris Dubai Hong Kong Shanghai San Francisco Toronto Manchester Hamburg Marseille Abu Dhabi Singapore B
Slide 35: Questions
Preliminary Results 2010 Prelim Results for the year ended 28 November 2010 Questions Thank you for listening, please feel free to ask any questions www.SThree.com SThree plc 35
Slide 36: Regional Trading Metrics
Preliminary Results 2010 Prelim Results for the year ended 28 November 2010 Regional Trading Metrics www.SThree.com SThree plc 36
Slide 37: UK Trading Metrics
Preliminary Results 2010 UK Trading Metrics Prelim Results for the year ended 28 November 2010 Runners at Period End GPDR - Constant Currency IT - Non IT Split 2010 3,000 NON IT -3.6% 140.0 40% 2,500 2,401 2,315 120.0 IT 100.0 -1.0% 60% 2,000 80.0 73.2 72.5 1,500 60.0 1,000 40.0 500 20.0 Perm - Cont
Slide 38: Benelux Trading Metrics
Preliminary Results 2010 Benelux Trading Metrics Prelim Results for the year ended 28 November 2010 Runners at Period End GPDR - Constant Currency IT - Non IT Split 2010 +6.4% 140.0 36% 1,000 927 -6.1% 871 120.0 NON IT 107.5 100.9 800 100.0 64% 600 80.0 IT 60.0 400 40.0 200 20.0 Perm - Cont Split 20
Slide 39: Germany Trading Metrics
Preliminary Results 2010 Germany Trading Metrics Prelim Results for the year ended 28 November 2010 Runners at Period End GPDR - Constant Currency IT - Non IT Split 2010 -1.6% 1,000 140.0 118.6 116.7 41% 800 +40.4% 120.0 NON IT 612 100.0 59% 600 436 80.0 IT 400 60.0 40.0 200 20.0 Perm - Cont Split 2
Slide 40: France Trading Metrics
Preliminary Results 2010 France Trading Metrics Prelim Results for the year ended 28 November 2010 Runners at Period End GPDR - Constant Currency IT - Non IT Split 2010 11% NON IT 500 140.0 450 -0.9% 120.0 +10.9% 400 337 334 350 100.0 92.7 83.6 300 80.0 250 IT 200 60.0 89% 150 40.0 100 50 20.0 Perm
Slide 41: ROW Trading Metrics
Preliminary Results 2010 ROW Trading Metrics Prelim Results for the year ended 28 November 2010 Runners at Period End GPDR - Constant Currency IT - Non IT Split 2010 300 140.0 120.0 48% +52.7% +2.9% 52% 100.0 NON IT 200 IT 171 80.0 82.3 80.0 112 60.0 100 40.0 20.0 Perm - Cont Split 2010 0 14% 0.0 RO
Slide 42: Supplementary Material
Preliminary Results 2010 Prelim Results for the year ended 28 November 2010 Supplementary Material www.SThree.com SThree plc 42
Slide 43: PBT Growth post dot com crash 2003 - 2008
Preliminary Results 2010 PBT Growth post dot com crash 2003 - 2008 Prelim Results for the year ended 28 November 2010 60 56.0 50.3 50 56% CAGR 40.3 2003 to 2008 40 34% CAGR PBT (£m) 29.5 30 2004 to 2008 20 17.3 10 6.1 0 2003 2004 2005 2006 2007 2008 Year Total PBT increase of 818% on 2003 www.SThree
Slide 44: Historical Gross Profit and Gross Margin
Preliminary Results 2010 Historical Gross Profit and Gross Margin Prelim Results for the year ended 28 November 2010 Gross Profit (£’m) Gross Margin (%) 250.0 218.9 200.0 40% 182.7 171.2 34.9% 35.1% 166.4 34.5% 34.7% 35% 34.0% 33.2% 33.0% 150.0 31.0% 30.8% 31.3% 135.5 123.0 30% 104.5 50% 42% 60% 40%
Slide 45: Health of Market: KPIs
Preliminary Results 2010 Health of Market: KPIs Prelim Results for the year ended 28 November 2010 Permanent hires starting within the month 30% 26% 25% 25% 25% 23% 22% 22% UK 21% 21% 20% 20% Int’l 20% 17% 17% 17% 16% 16% 15% 14% 10% 5% 0% 2007 H1 2007 H2 2008 H1 2008 H2 2009 H1 2009 H2 2010 H1 2010
Slide 46: Health of Market: KPIs
Preliminary Results 2010 Health of Market: KPIs Prelim Results for the year ended 28 November 2010 Permanent placement ‘dropouts’ 14% 13% 13% 13% 12% 12% 11% 11% 11% 11% UK 10% 10% 10% 10% Int’l 9% 8% 8% 8% 8% 8% 6% 4% 2% 0% 2007 H1 2007 H2 2008 H1 2008 H2 2009 H1 2009 H2 2010 H1 2010 H2 ‘Dropouts’
Slide 47: Candidate salary positioning
Preliminary Results 2010 Candidate salary positioning Prelim Results for the year ended 28 November 2010 Permanent salary analysis 2010 2009 100k + 100k + 70k - 100k 2% 70k - 100k 2% 0k - 30k 0k - 30k 6% 8% 15% 33% 19% 50k - 70k 18% 50k - 70k 23% 30k - 40k 29% 30k - 40k 40k - 50k 32% 40k - 50k 23% 2
Slide 48: Cost base analysis for 2010
Preliminary Results 2010 Cost base analysis for 2010 Prelim Results for the year ended 28 November 2010 Other IT & Professional 6% Central / support 10% staff 27% Advertising Sales staff / sales 2% related 73% Occupancy 9% Payroll Costs 73% Cost base Payroll costs The Group operates a relatively low
Slide 49: Exchange Rate
Preliminary Results 2010 Exchange Rate Prelim Results for the year ended 28 November 2010 www.SThree.com SThree plc 49
Slide 50: Sector Diversification Leads To Global Opportunities
Sector Diversification Leads To Global Preliminary Results 2010 Opportunities Prelim Results for the year ended 28 November 2010 The Glasgow/Singapore Example SINGAPORE IT SCOTLAND SCOTLAND SE ASIA SE ASIA SINGAPORE IT Oil & Gas Oil & Gas Oil & Gas Banking Virtual Office Based Glasgow Based Glasgow
Slide 51: Performance management systems
Preliminary Results 2010 Performance management systems Prelim Results for the year ended 28 November 2010 Actual screenshot Permanent Consultant www.SThree.com SThree plc 51
Slide 52: “Churn” - A key multiplier of demand
Preliminary Results 2010 “Churn” - A key multiplier of demand Prelim Results for the year ended 28 November 2010 Vacancy filled Vacancy filled New Job Donor Business 3 Donor Business 1 3 1 has vacancy has vacancy 2 Vacancy filled Vacancy filled Donor Business 2 has vacancy Even when markets are matu