Sthree Plc · LSE:STEM
Sthree — Investor Presentation (July 2024)
24 slides from Sthree's investor presentation, Jul 23, 2024
Slide 1: Investor Briefing 'ECM Explained'
Investor Briefing 23 July 2024 ‘ECM Explained’ Timo Lehne, CEO Andrew Beach, CFO
Slide 2: How we will achieve our ambitions
How we will achieve our ambitions 1 Seize the market opportunity 2 Discipline and focus 3 Technology improvement programme STHREE.COM 2
Slide 3: How we will achieve our ambitions
How we will achieve our ambitions Global megatrends drive an increasing demand for STEM skills Digitalisation Decarbonisation Research-led Demographic Shifting attitudes healthcare changes to work 1 Seize the market opportunity 2 Discipline and focus 3 Technology improvement programme STHREE.COM 3
Slide 4: How we will achieve our ambitions
To hear more about our path How we will achieve our ambitions to growth, scan the QR code with your smart device Market invest model – drives focused decision-making Future Financial market growth returns opportunities 1 Seize the market opportunity 2 Discipline and focus 3 Technology improvement pr
Slide 5: How we will achieve our ambitions
To hear more about our Technology Improvement How we will achieve our ambitions Programme, scan the QR code with your smart device Delivering a world-class operational platform, driving data-driven decision-making 1 Seize the market opportunity 2 Discipline and focus 3 Technology improvement program
Slide 6: What we will cover today
What we will cover today What ECM is and how Structural growth How it is highly How TIP unlocks scale, it differs from the drivers that are driving complex and why this margins and value from Independent Contract demand from clients complexity is great for M&A Model SThree STHREE.COM 6
Slide 7: Resourcing to meet our clients' increasingly complex needs
Resourcing to meet our clients’ increasingly complex needs Independent Contractors Contract Employed Contractors Permanent 46% 84% 38% 16% Comprehensive suite of compliant STEM resourcing solutions for Clients Salary Annual leave Sick leave Self-employed Sole Trader Employee or Limited Company STHRE
Slide 8: Resourcing to meet our clients' increasingly complex needs: Permanent
Resourcing to meet our clients increasingly complex needs Permanent One-off invoice when candidate starts Permanent position SThree engaged to find candidate for client on a Permanent basis No recurring revenue STHREE.COM 8
Slide 9: Resourcing to meet our clients' increasingly complex needs: Independent Contractor
Resourcing to meet our clients increasingly complex needs Independent Contractor Month June July August September October … Approved timesheets submitted ● ● ● ● for time worked Contractor invoices SThree for payment, only for the time ● ● ● ● worked Contractor responsible for ● ● ● ● paying taxes,
Slide 10: Resourcing to meet our clients' increasingly complex needs: Employed Contractor
Resourcing to meet our clients increasingly complex needs Employed Contractor Month June July August September October … Approved timesheets submitted ● ● ● ● for time worked SThree payrolls contractor, ● ● ● ● ● with paid leave accrued SThree responsible for paying ● ● ● ● ● taxes, insurances etc.
Slide 11: Changing regulations are impacting clients and candidates
Changing regulations are impacting clients and candidates Dentons, 27 March 2023 London Loves Business, 8 April 2024 The Times, January 18, 2024 The Guardian, 18 May 2023 Unleash, 8 February 2024 Holland & Knight, 10 January 2024 inbound logistics, March 2024 Osborne Clarke, 13 October 2023 Newsweek
Slide 12: Resourcing to meet our clients' increasingly complex needs
Resourcing to meet our clients increasingly complex needs Independent Employed Permanent Contractors Contractors Increasing complexity + Scarcity of service provision Value generation for SThree STHREE.COM 12
Slide 13: Structural growth in demand
Structural growth in demand What are the key drivers globally France Belgium Germany Globally governments are implementing regulations Code du travail – Article L1254 Employment Contracts Act Scheinselbststandigkeit around contract workers to: • Protect workers’ rights • Raise higher tax revenues UK
Slide 14: Customers love that our services meet their requirements
Customers love that our services meet their requirements Our expertise and ability to offer a full suite of services creates deeper relationships as a trusted advisor Major European bank Global food manufacturer Largest German luxury auto manufacturer • Serviced across DACH, • Solid mix of both Inde
Slide 15: Employed Contractor Model is fastest growing service
Employed Contractor Model is fastest growing service Breakdown of Group Net Fees by service Group Contract Net Fees CAGR: FY19 (pre-pandemic) 8% 2% 22% HY24 With strong growth across all major markets STHREE.COM 15
Slide 16: Customer demand to mitigate risk and areas of complexity
Customer demand to mitigate risk and 4 areas of complexity 1 Understanding landscape the regulatory 2 Compliant employment models to offer services HR Legal Placement support Management 3 Managing employment of contractors 4 Infrastructure tax compliance for payrolling and Health & Discrimination An
Slide 17: Varying laws and regulations create high barriers to entry driven by cost to build
Varying laws and regulations create high barriers to entry driven by cost to build and manage complex infrastructure HR Legal Placement support Management STHREE.COM 17
Slide 18: Current model generates higher Net Fees without higher profit margins
Current model generates higher Net Fees without higher profit margins Current model Growth in Contractors means more 3-5 employees currently required to Net Fees • Legal professionals manage each placement on an ongoing basis Profit • Placement support • Credit controllers • HR professionals As supp
Slide 19: TIP delivering opportunity to drive scale and higher profits
TIP delivering opportunity to drive scale and higher profits Current model… to… 3-5 employees currently required to Only sales consultant required to Net Fees Net Fees manage each placement on an add role and manage relationships ongoing basis Profit with candidate/client Profit Fixed Costs Fixed Co
Slide 20: With TIP we are introducing the latest technologies
With TIP we are introducing the latest technologies Artificial Intelligence used Regulatory Expertise built in Automation to remove to review contracts more by design to meet regulatory manual processes and quickly and efficiently requirements wherever the reduce billing errors placement STHREE.COM
Slide 21: Combination of ECM and TIP are key to unlocking value from M&A
Combination of ECM and TIP are key to unlocking value from M&A ECM TIP HR Legal Placement support Management Provides smaller players Creates high barriers to Creates substantial with the ability to offer exit as acquired teams synergies to drive ECM to their clients are provided with the higher mar
Slide 22: Key takeaways
Key takeaways 1 ECM forms part of a suite of resourcing 2 Structural growth drivers in place, with 3 ECM is highly complex to build and deliver, 4 We are investing in state-of-the art solutions that goes SThree positioned to with complexity technology to drive beyond staffing to take advantage of th
Slide 23: Q&A
Q&A
Slide 24: Thank you
Thank you