SThree plc · LSE:STEM
SThree — H1 2015 Earnings Presentation
45 slides from SThree's earnings presentation, August 2015
Slide 1: Half Year Results Presentation 2015
HALF YEAR RESULTS PRESENTATION 2015 RESULTS FOR SIX MONTHS ENDED 31 May 2015
Slide 2: H1 2015: A Strong Platform for Growth
H1 2015: A STRONG PLATFORM FOR GROWTH • Operating profit up 68% to £14.1m (H1 2014: £8.4m) and up 79%* on a constant currency basis • Gross Profit (“GP”) up 14%* year on year (“YoY”) • Strong growth across ICT (up 20%* YoY) and Life Sciences (up 21%* YoY) offset by weak performance of Energy (-3%* Y
Slide 3: Financial Results
FINANCIAL RESULTS 3
Slide 4: H1 2015: Financial Highlights
H1 2015: FINANCIAL HIGHLIGHTS H1 2015 H1 2014 Actual Growth CC Growth* Revenue £403.6m £341.7m +18% +21% Contract Gross Profit £70.5m £60.8m +16% +20% Permanent Gross Profit £40.0m £40.0m +0% +5% Total Gross Profit £110.5m £100.8m +10% +14% Operating Profit £14.1m £8.4m +68% +79% Conversion Ratio 12
Slide 5: Historical Gross Profit & Gross Margin
HISTORICAL GROSS PROFIT & GROSS MARGIN Gross Profit Gross Margin £250m 40.0% £213.6m £218.2m 34.1% 34.5% 35.3% 34.9% £199.5m £192.8m 35.0% 30.8% £200m £189.5m 31.2% 29.2% 30.0% 27.4% £167.8m £162.4m 50% 51% 113.9 117.4 25.0% 53% 52% £150m 102.4 102.2 101.2 62% 56% 76.2 20.0% 61% 89.8 64% £100m 15.0%
Slide 6: Historical Operating Profit & Conversion Ratio
HISTORICAL OPERATING PROFIT & CONVERSION RATIO Operating Profit Before Exceptional Items Conversion Ratio Operating Profit Before Exceptional Items as a % of Gross Profit £60m £56.8m 30% £50m 25% 25.9% 23.8% £40m 32.4 20% £30.0m £29.8m £30m 15% £25.1m 15.3% £21.2m £21.0m 13.7% 12.8% 12.8% £18.0m 19.
Slide 7: Cash Flow
CASH FLOW H1 2015 H1 2014 £m £m Operating Profit Before Exceptional Items 14.1 8.4 Depreciation and Amortisation 3.5 2.6 • Receivables Share Awards Charge and Other Non Cash Items 2.0 1.3 Decrease due to improved Decrease/(Increase) in Receivables 5.6 (19.1) collections from clients YoY (Decrease)/I
Slide 8: Cash Flow Bridge
CASH FLOW BRIDGE 0.7 2.0 £15m 0.6 5.5 0.7 2.0 5.5 (0.6) 3.7 £10m 14.1 (3.7) £5m 14.1 5.7 (5.7) £0m 5.9 (5.9) 3.5 £(5m) 2.4 9.4 (3.5) £(10m) (9.9) (2.4) (9.4) 2014 Net OP before Non-Cash ITJB Share Working Taxes and Foreign Exceptional H1 2015 Debt exceptionals Items Disposal Transactions Capital CAP
Slide 9: Balance Sheet
BALANCE SHEET 31 May 30 November Balance 2015 2014 sheet remains £m £m robust Intangible Assets 10.4 11.1 Property, Plant & Equipment 4.9 4.2 Deferred Tax 2.5 3.4 • Provisions Net Working Capital 53.9 54.3 Decrease due to payments against the restructuring provisions created in 2013 and 2014 Provisi
Slide 10: Earnings Per Share and Dividends
EARNINGS PER SHARE AND DIVIDENDS H1 2015 H1 2014 Change % Profit After Tax Before Exceptional Items £9.2m £5.7m +61% For Basic EPS 126.3m 122.8m +3% Weighted Average Dilutive Impact of Share Plans 9.5m 11.2m -15% Number of Shares For Fully Diluted EPS 135.8m 134.0m +1% EPS Before Basic EPS 7.3p 4.7p
Slide 11: Euro & USD/GBP Exchange Rate
EURO & USD/GBP EXCHANGE RATE Six Months Ended 31 May 2015 Six Months Ended 31 May 2015 Average Closing Gross Profit Op Profit Impact of one percent change £'000 EUR € 1.33 1.39 EUR € 487 155 USD $ 1.53 1.53 USD $ 197 49 Six Months Ended 1 June 2014 Six Months Ended 1 June 2014 Average Closing Gross
Slide 12: Operating Review
OPERATING REVIEW 12
Slide 13: 2015 Highlights
2015 HIGHLIGHTS 2015 Priorities 2015 Progress Strategic investment in Contract Very strong performance • GP +20%* YoY • Contract runners +19% YoY • Contract now 64% of GP (2014 H1: 60%) • Now represents 55% of headcount, our highest ever Drive recovery in Permanent productivity • Successful focus on
Slide 14: Business Development - Summary
BUSINESS DEVELOPMENT - SUMMARY 2% 8% 18% 30% 36% 18% Contract H1 2015 H1 2015 H1 2015 41% period end % of GP % of GP % of GP 9% Geographical headcount Contract / Sector Perm Diversification Diversification +11% YoY 64% 12% 18% 44% ICT UK&I Banking & Finance Energy C Europe Cont Perm Engineering Amer
Slide 15: Headcount
HEADCOUNT Average sales heads up May 12 Nov 12 May 13 Nov 13 May 14 Nov 14 May 15 5% YoY and period end Period End sales heads up 2% YoY 2,195 2,116 2,220 2,327 2,579 2,578 2,673 Total Heads Average sales heads YoY: Period End UK&I +4% 1,685 1,633 1,732 1,862 2,080 2,081 2,119 Sales Heads* Europe +4
Slide 16: Permanent / Contract Analysis
PERMANENT / CONTRACT ANALYSIS Gross Profit Gross Profit Mix by Sector Gross Profit Mix by Region H1 2015 H1 2015 100% 100% 30% 30% 33% 27% 36% 80% 40% 80% 38% 36% 51% 68% 60% 60% H1 2015 40% 40% % of GP 70% 70% 67% 73% 64% 60% 62% 64% 20% 49% 20% 32% 0% 0% ICT Banking Energy Engineering Life Science
Slide 17: Key Performance Indicators: Contract
KEY PERFORMANCE INDICATORS: CONTRACT Contract Runners 7,573 7,715 7,715 6,493 Period end 5,745 5,791 Contract runners 5,122 excluding Energy 4,692 up 21% YoY and 4,157 4,359 up 5% against year end position -28% +5% +8% +9% +13% +2% +19% vs vs vs vs vs vs vs FY 08 FY 09 FY 10 FY 11 FY 12 FY 14 HY 14
Slide 18: Contract Runners – Comparison to Prior Years
CONTRACT RUNNERS – COMPARISON TO PRIOR YEARS 135% 131% 130% 125% 120% 115% 112% 110% 109% ` 105% 108% 105% 105% 100% 95% 90% November December January February March April May June July August September October November 2010 2011 2012 2013 2014 2015 HALF YEAR RESULTS PRESENTATION 2015 | RESULTS FOR
Slide 19: Contract Runners – Comparison to Prior Years (excluding Energy)
CONTRACT RUNNERS – COMPARISON TO PRIOR YEARS (excluding Energy from all years) 135% 130% An improving trend, with a 125% strong exit 123% rate 120% 115% 110% 108% ` 107% 107% 105% 105% 104% 100% 95% 90% November December January February March April May June July August September October November 20
Slide 20: Key Performance Indicators: Permanent
KEY PERFORMANCE INDICATORS: PERMANENT Permanent Placement Volumes 10,236 7,434 7,343 6,551 6,429 6,601 6,060 Placement volumes excluding 3,066 3,057 3,066 Energy up -41% +8% +13% -1% -12% +3% +2% 5% YoY vs vs vs vs vs vs vs FY 08 FY 09 FY 10 FY 11 FY 12 FY 13 H1 14 FY08 FY09 FY10 FY11 FY12 FY13 FY14
Slide 21: GP Business Mix – Geography
GP BUSINESS MIX – GEOGRAPHY 9% 9% 8% 30% 14% 30% 30% 15% 18% FY 2014 H1 2014 H1 2015 % of GP % of GP % of GP 46% 47% 44% UK&I C Europe Americas APAC & ME An increasingly balanced portfolio UK&I Most mature region, still with exciting opportunities Benelux Recovery underway, particularly Netherlands.
Slide 22: Geographical Analysis
GEOGRAPHICAL ANALYSIS Gross Profit UK&I 8% 9% Benelux 30% 30% 14% 18% France H1 2015 H1 2014 % of GP Germany 2 5% % of GP 9% 14 % 3 0% 17 % 5 % Americas 25% 23% 16% 17% 5% APAC & ME 5% Growth / (Decline) by Region H1 2015 H1 2014 UK&I 62% 34% C Europe 11% 12% 19% Americas 3% 6% 7% APAC & ME Asia Pac
Slide 23: Performance by Region
PERFORMANCE BY REGION GP Average Consultant Growth YoY H1 2015 Growth YoY Cont Perm Total Cont / Perm Mix Cont Perm Total Perm Cont 27% 73% H1 15 +10% +16% +11% +7% +1% +4% UK&I FY 14 +14% +3% +11% +15% +11% +13% Perm Cont 36% 64% H1 15 +19% +2% +12% +16% (8%) +4% C Europe FY 14 +23% (3%) +11% +22%
Slide 24: GP Business Mix – Sector
GP BUSINESS MIX – SECTOR 2% 2% 2% 17% 17% 18% 39% 40% 41% 9% FY 2014 9% H1 2014 H1 2015 9% % of GP % of GP % of GP 15% 14% 12% 18% 18% 18% ICT Banking & Finance Energy Engineering Life Sciences Other Non ICT now represents 59% of Gross Profit ICT Only 7% of our business is outside UK&I and C Europe,
Slide 25: Performance by Sector
PERFORMANCE BY SECTOR GP Average Consultant Growth YoY H1 2015 Growth YoY Cont Perm Total Cont / Perm Mix Cont Perm Total Perm Cont 30% 70% H1 15 +20% +20% +20% +20% +7% +15% ICT FY 14 +12% (1%) +8% +18% +7% +13% Perm Cont 51% 49% Banking & H1 15 +17% (2%) +7% +8% (16%) (8%) Finance FY 14 +31% +11%
Slide 26: Energy – Group
ENERGY – GROUP GP Growth YoY Energy GP as % of Group GP Energy Sector Mix by Sub-sector Cont Perm Total 4% 2% Power Energy 2% 12% Generation HY 15 +11% (25%) (3%) 9% 15% Oil & Gas FY 14 +99% +9% +51% H1 2015 % of Mining & Average Consultant Growth YoY Group Minerals GP Renewable Cont Perm Total Ener
Slide 27: Outlook
OUTLOOK • Trading environment remains positive in majority of our territories • Americas continues to grow strongly • Life Sciences, ICT, Banking & Finance and Engineering are all showing good growth • Energy sector remains challenging • FX continues to be a headwind • Investment in Contract headcou
Slide 28: Supplementary Material
SUPPLEMENTARY MATERIAL 28
Slide 29: Headcount
HEADCOUNT Nov 08 May 09 Nov 09 May 10 Nov 10 May 11 Nov 11 May 12 Nov 12 May 13 Nov 13 May 14 Nov 14 May 15 Period End Total Heads 2,217 1,606 1,556 1,733 1,814 1,960 2,204 2,195 2,116 2,220 2,327 2,579 2,578 2,673 Period End Sales Heads* 1,643 1,176 1,116 1,246 1,269 1,416 1,675 1,685 1,633 1,732 1
Slide 30: Consultant Headcount
CONSULTANT HEADCOUNT Nov 08 May 09 Nov 09 May 10 Nov 10 May 11 Nov 11 May 12 Nov 12 May 13 Nov 13 May 14 Nov 14 May 15 Period End Consultants 1,496 1,082 1,011 1,134 1,163 1,566 1,515 1,473 1,409 1,454 1,580 1,759 1,766 1,790 881 935 980 644 783 586 587 786 Contract 614 719 462 442 449 Permanent 419
Slide 31: UK&I Trading Metrics
UK&I TRADING METRICS Cont GP Perm GP Total GP UK YoY growth +10% +16% +11% 30% of Group GP May 15 May 14 YoY Ireland Countries 2 2 +0 Offices 13 15 -2 # YoY YoY Cont Perm Total Cont Perm Total Cont Perm Total Period End Consultant Headcount 325 217 542 8 0 8 +3% +0% +1% Six Month Average Consultant
Slide 32: UK&I Trading Metrics
UK&I TRADING METRICS SECTOR SPLITS Period End YoY vs Year End 1% Runners +3% -5% Gross Profit Per Day Rate Within Region 9% H1 2015 2,836 YoY - H1 2014 2,759 12% H1 2015 FY 2014 2,970 Below Group average 7% 54% % of GP 0 2,000 4,000 17% 27% 28% ICT Banking & Finance Energy H1 2015 Cont GP FY 2014 En
Slide 33: Benelux Trading Metrics
BENELUX TRADING METRICS Bel Lux Neth Cont GP Perm GP Total GP YoY growth +23% -5% +14% 16% of Group GP May 15 May 14 YoY Countries 3 3 - Offices 7 7 - # YoY YoY Cont Perm Total Cont Perm Total Cont Perm Total Period End Consultant Headcount 189 102 291 22 (37) (15) +13% -27% -5% Six Month Average Co
Slide 34: Benelux Trading Metrics
BENELUX TRADING METRICS SECTOR SPLITS Period End YoY vs Year End Runners +31% +13% Gross Profit Per Day Rate Within Region 6% H1 2015 1,482 7% YoY -5% H1 2014 1,130 11% H1 2015 FY 2014 1,314 Above Group average 49% % of GP 0 1,000 2,000 12% 15% 27% ICT 32% Banking & Finance Energy H1 2015 Cont GP FY
Slide 35: Germany Trading Metrics
GERMANY TRADING METRICS Germany Cont GP Perm GP Total GP YoY growth +15% +8% +12% 23% of Switz Group GP May 15 May 14 YoY Countries 2 2 - Offices 8 9 -1 # YoY YoY Cont Perm Total Cont Perm Total Cont Perm Total Period End Consultant Headcount 248 227 475 45 (8) 37 +22% -3% +8% Six Month Average Cons
Slide 36: Germany Trading Metrics
GERMANY TRADING METRICS SECTOR SPLITS Period End YoY vs Year End Runners +27% +1% Gross Profit Per Day Rate Within Region H1 2015 1,381 YoY -6% 24% H1 2014 1,086 H1 2015 FY 2014 1,367 Above Group average 50% % of GP 0 500 1,000 1,500 12% 7% 7% ICT Banking & Finance Energy 43% H1 2015 Cont GP 44% FY
Slide 37: France Trading Metrics
FRANCE TRADING METRICS Cont GP Perm GP Total GP YoY growth +19% -11% +7% 5% of Group GP May 15 May 14 YoY Countries 1 1 - Offices 1 1 - # YoY YoY Cont Perm Total Cont Perm Total Cont Perm Total Period End Consultant Headcount 43 40 83 0 (1) (1) +0% -2% -1% Six Month Average Consultant Headcount 44 4
Slide 38: France Trading Metrics
FRANCE TRADING METRICS SECTOR SPLITS Period End YoY vs Year End Runners +32% +19% Gross Profit Per Day Rate Within Region 15% H1 2015 470 YoY -7% H1 2014 356 7% H1 2015 FY 2014 395 Below Group average 5% % of GP 54% 0 200 400 600 19% ICT 32% Banking & Finance 36% Energy H1 2015 Cont GP FY 2014 Engin
Slide 39: Americas Trading Metrics
AMERICAS TRADING METRICS Cont GP Perm GP Total GP YoY growth +51% +13% +34% 18% of Group GP May 15 May 14 YoY Countries 1 3 -2 Offices 6 9 -3 # YoY YoY Cont Perm Total Cont Perm Total Cont Perm Total Period End Consultant Headcount 128 115 243 28 14 42 +28% +14% +21% Six Month Average Consultant Hea
Slide 40: Americas Trading Metrics
AMERICAS TRADING METRICS SECTOR SPLITS Period End YoY vs Year End 1% Runners +44% +9% Gross Profit Per Day Rate Within Region 8% H1 2015 1,173 YoY -1% H1 2014 817 42% H1 2015 27% FY 2014 1,073 Above Group average % of GP 0 500 1,000 1,500 22% ICT Banking & Finance 38% Energy H1 2015 Cont GP 46% FY 2
Slide 41: Asia Pacific & Middle East Trading Metrics
ASIA PACIFIC & MIDDLE EAST TRADING METRICS Cont GP Perm GP Total GP YoY growth +25% -5% +3% 8% of Group GP May 15 May 14 YoY Countries 6 10 -4 Offices 6 11 -5 # YoY YoY Cont Perm Total Cont Perm Total Cont Perm Total Period End Consultant Headcount 47 109 156 (4) (36) (40) -8% -25% -20% Six Month Av
Slide 42: Asia Pacific & Middle East Trading Metrics
ASIA PACIFIC & MIDDLE EAST TRADING METRICS SECTOR SPLITS Period End YoY vs Year End Runners +8% -18% Gross Profit Per Day Rate Within Region 3% 12% H1 2015 373 16% YoY -10% H1 2014 345 H1 2015 FY 2014 454 Below Group average % of GP 0 200 400 600 31% 38% ICT 32% 30% Banking & Finance Energy H1 2015
Slide 43: Cost Base Analysis
COST BASE ANALYSIS The Group has a flexible cost base 9% 2% 17% 5% 7% Cost Base Payroll Costs 77% 83% Payroll Property Advertising IT & Professional Other Support Services Sales Related Costs Note 1: Based on costs for H1 2015 HALF YEAR RESULTS PRESENTATION 2015 | RESULTS FOR SIX MONTHS ENDED 31 MAY
Slide 44: 41 Offices in 15 Countries
41 OFFICES IN 15 COUNTRIES BELGIUM LUXEMBOURG NETHERLANDS GERMANY UK SWITZERLAND IRELAND FRANCE JAPAN USA HONG KONG SINGAPORE DUBAI MALAYSIA AUSTRALIA HALF YEAR RESULTS PRESENTATION 2015 | RESULTS FOR SIX MONTHS ENDED 31 MAY 2015 www.sthree.com | SThree plc 44
Slide 45: Financial Calendar
FINANCIAL CALENDAR 11 SEPTEMBER 5 NOVEMBER 30 NOVEMBER Q3 Interim Ex-dividend date for 2015 Financial Year Management 2015 Interim Dividend End Statement 11 DECEMBER 11 DECEMBER 25 JANUARY Trading update for the 2015 Interim Dividend Annual results for the year ended 30 Payable year ended 30 Novembe