Sthree Plc · LSE:STEM
Sthree — Investor Day (November 2019)
125 slides from Sthree's investor day presentation, Nov 21, 2019
Slide 1: Bringing Skilled People Together to Build the Future
BRINGING SKILLED PEOPLE TOGETHER TO BUILD THE FUTURE CAPITAL MARKETS DAY 21 NOVEMBER 2019
Slide 2: Disclaimer
DISCLAIMER The following presentation, including any printed or electronic copy of these slides, the talks given by the presenters, the information communicated during any delivery of the presentation and any question and answer session and any document or material distributed at or in connection wi
Slide 3: Why We Are Having a Capital Markets Day Today
WHY WE ARE HAVING A CAPITAL MARKETS DAY TODAY Reintroduction of SThree The scale of the STEM opportunity Why SThree is well placed to take advantage of it Where our new strategy will take us How we will measure our success 2 CAPITAL MARKETS DAY 2019
Slide 4: Our Business Today
OUR BUSINESS TODAY MARK DORMAN CHIEF EXECUTIVE OFFICER 3 CAPITAL MARKETS DAY 2019
Slide 5: Reintroducing SThree
REINTRODUCING STHREE STEM FY18 Q3 YTD 2019 £321m 86% Life Sciences, Technology, Energy & Engineering, £1.26bn Net fees revenue net fees generated Banking & Finance internationally** £53.4m 75% PBT operating 33 cash flow Contract 75% years of experience 2013 – 2019 CAGR 2,979* 10% 19% 24% employees w
Slide 6: We Are Focused on the Most Attractive STEM Staffing Markets Globally
WE ARE FOCUSED ON THE MOST ATTRACTIVE STEM STAFFING MARKETS GLOBALLY NL UK CA FR DE BE CH US IT CN IN JP SThree ZA AU Non SThree Source: SIA 5 CAPITAL MARKETS DAY 2019
Slide 7: Our Business Is Resilient
OUR BUSINESS IS RESILIENT Adjusted operating profits tripled over period, despite a number of shocks in key markets US/China trade war Brexit US tariffs uncertainty Brexit Strong growth imposed referendum / in Eurozone Oil price crash – Trump elected £59.8m £53.9m Dec 40% lower than June £44.9m £41.
Slide 8: We Are the Only Global, Pure-Play STEM Specialist
WE ARE THE ONLY GLOBAL, PURE-PLAY STEM SPECIALIST WE ARE UNIQUE 7 CAPITAL MARKETS DAY 2019
Slide 9: STEM Contract
BRINGING SKILLED PEOPLE TOGETHER TO BUILD THE FUTURE STEM CONTRACT Diversification Flexible working 3% by sector 25% 23% The short-to-mid term project 20% work often required or desired 45% from STEM specialist workers Technology Life Sciences Energy & Banking & Other Employed Freelance Permanent En
Slide 10: The Secular Trends in Our Markets
THE SECULAR TRENDS IN OUR MARKETS LONG TERM GROWTH IN THE DEMAND FOR STEM SKILLS 9 CAPITAL MARKETS DAY 2019
Slide 11: STEM Roles Central to Impacting Global Secular Trends
STEM ROLES CENTRAL TO IMPACTING GLOBAL SECULAR TRENDS £79bn Life Sciences 2015 2030 2050 increase in UK public spending 121 % by 2065 due to ageing Job growth in 12.3% 16.4% 21.3% population the next decade Global population 60+ years Source: ONS Source: Government Office for Science With a focus on
Slide 12: Opportunity This Presents
OPPORTUNITY THIS PRESENTS £1.5bn 25% Only 25% of execs believe A shortage of staff with SThree STEM skills is costing UK their talent pool has the Source: STEM Learning businesses an estimated capability to deliver their Interacting with and Source: Deloitte Digital UK £1.5bn a year Disruption Index
Slide 13: Helping Our Clients with Their Tech Needs
HELPING OUR CLIENTS WITH THEIR TECH NEEDS PAUL BOYHAM COO, Radical Company 12 CAPITAL MARKETS DAY 2019
Slide 14: The Secular Trends in Our Markets: Flexible Working
THE SECULAR TRENDS IN OUR MARKETS FLEXIBLE WORKING BECOMING THE FUTURE OF THE WORK PLACE 13 CAPITAL MARKETS DAY 2019
Slide 15: Flexible Working Is a Global Trend with High Skill STEM Talent
FLEXIBLE WORKING IS A GLOBAL TREND WITH HIGH SKILL STEM TALENT The gig economy appeals to four in five millennials 50% US STEM salaries are 50% higher than average $4.5tr Source: Deloitte Millennial Survey and Gen Zs... Source: US Bureau of Labor Statistics Global economy spend Source: SIA 49% … and
Slide 16: Opportunity This Presents
OPPORTUNITY THIS PRESENTS 73% Source: Mercer of executives expect that contingent and freelance workers will substantially 44% Source: WEF of business leaders say the top socio-economic driver of changes in the industry is SThree 75% Contract • Employed contractor GLOBAL replace full-time employees
Slide 17: The Benefits of Flexible Working
THE BENEFITS OF FLEXIBLE WORKING CYRIL DOROCANT Health and Safety Officer 16 CAPITAL MARKETS DAY 2019
Slide 18: Capturing the Opportunity
CAPTURING THE OPPORTUNITY 17 CAPITAL MARKETS DAY 2019
Slide 19: Our Opportunity Is Huge
OUR OPPORTUNITY IS HUGE SThree already has successful operations in the most important STEM markets £368.6bn £24.2bn £32.8bn £18.8bn £111bn £48.7bn In highly fragmented markets SThree already has £260.5bn £18.0bn £22.3bn £15.2bn £76.5bn £40.7bn a platform foundation to support significant growth Non
Slide 20: Our Focus on Contract Gives Us a Platform That Enables Us to Scale
OUR FOCUS ON CONTRACT GIVES US A PLATFORM THAT ENABLES US TO SCALE Resilient in Economic Particularly More uncertain case – higher Growth in new suited to STEM predictable High barriers markets and Underpins lifetime value business staffing and visible to entry strong as dividend and models market e
Slide 21: Our Platform Model Enables Us to Capture the Opportunity
OUR PLATFORM MODEL ENABLES US TO CAPTURE THE OPPORTUNITY • Delivering scale at lower marginal cost • Capacity utilisation • Shared central services across a multi- office network Placed 150K contractors in 20+ years • Offering clients an outsourcing of complex business challenges We raise nearly 300
Slide 22: Our Scale Provides Coverage of Complex, Regulatory Landscapes
OUR SCALE PROVIDES COVERAGE OF COMPLEX, REGULATORY LANDSCAPES 500 US CONCERNS OVER LITIGATION 2016 2017 New workforce laws in US over last 2 years Fair Labour Standards Act (FLSA) – Wage and Hour legislation $1.7bn $2.7bn Top 10 US employment 50,000 DE related settlements Source: Carlton Fields New
Slide 23: Helping Clients Navigate Regulatory Landscapes
HELPING CLIENTS NAVIGATE REGULATORTY LANDSCAPES CHARLIE COX Commercial manager, SThree 22 CAPITAL MARKETS DAY 2019
Slide 24: Our Brands Provide Focus on Specific Skills or Sectors
OUR BRANDS PROVIDE FOCUS ON SPECIFIC SKILLS OR SECTORS Enabling us to build valuable communities and connect with customer needs Our Candidate Communities QUALITY ASSURANCE IN LIFE SCIENCES 10K+ global candidates SALESFORCE.COM Accounts for 15% of our US placements Global ERP Implementation Demand f
Slide 25: Strategy for Success
STRATEGY FOR SUCCESS 25 CAPITAL MARKETS DAY 2019
Slide 26: Our Strategic Process
OUR STRATEGIC PROCESS Provides structure to support our entrepreneurial spirit • Managing for Value approach introduced to assess the Economic Value (EV) of strategic options • EV can be measured and managed Economic Value (£m) • Different courses of action will yield different EVs • EV is the summa
Slide 27: Creating Structure to Execute Our Strategy
CREATING STRUCTURE TO EXECUTE OUR STRATEGY Focus on current Continued Building on Data-enabled Utilise data to drive geographies and investment in sales operational decision making our business markets and marketing capabilities 27 CAPITAL MARKETS DAY 2019
Slide 28: Our Immediate Strategic Priorities
OUR IMMEDIATE STRATEGIC PRIORITIES Continue to evolve the channels we Continued investment in utilise to deliver value to our candidates sales and marketing & customers Achieve business Enhancing the use of data to drive efficiency and Utilise data to drive further performance improvement and clearl
Slide 29: Our New Strategic Pillars
OUR NEW STRATEGIC PILLARS Leveraging our position Create a world class To be a leader in Find, develop, retain at the centre of STEM to operational platform markets we choose great people deliver sustainable through data, to serve value to our candidates technology and and customers infrastructure 2
Slide 30: The Strength of Our Model
THE STRENGTH OF OUR MODEL ALEX SMITH CHIEF FINANCIAL OFFICER
Slide 31: Strong Track Record with Profits Tripled Since 2013
STRONG TRACK RECORD WITH PROFITS TRIPLED SINCE 2013 NET FEES OPERATING PROFIT BASIC EPS Consensus 2019 £345m Consensus 20191 £60m Consensus 2019 33.3p FY2018 FY2018 FY2018 FY2017 FY2017 FY2017 FY2016 FY2016 FY2016 FY2015 FY2015 FY2015 FY2014 FY2014 FY2014 FY2013 FY2013 FY2013 10 % 6 year CAGR 19 % 6
Slide 32: Consensus to Achieve the Low End 2022 Target Three Years Early
CONSENSUS TO ACHIEVE THE LOW END 2022 TARGET THREE YEARS EARLY 2017 Capital Markets Day targets for 20222 CONSENSUS 20191 LOW MEDIUM HIGH £345 £330 £400 £435 NET FEES million million million million £60 £60 £85 £100 OP million million million million 17% 18% 21% 23% CR% 3 years ahead of plan 1. Cons
Slide 33: Well Diversified Business
WELL DIVERSIFIED BUSINESS Division 25% Region 6% Sector 3% 22% 14% 20% 75% 45% 58% 21% 11% Contract UK&I Technology Permanent C Europe Banking USA Energy & Engineering APAC & ME Life Sciences Other 33 CAPITAL MARKETS DAY 2019 1. Based on Q3 2019 YTD
Slide 34: We Have Actively Remixed the Business Towards Contract
WE HAVE ACTIVELY REMIXED THE BUSINESS TOWARDS CONTRACT 2008 2013 Q3 2019 YTD 48% 44% 25% 52% 52% 56% 56% 75% Contract Contract Contract 75% Contract Permanent 34 CAPITAL MARKETS DAY 2019
Slide 35: Why Focus on Contract?
WHY FOCUS ON CONTRACT? • PUREPLAY STEM • SUPERIOR PLATFORM MODEL TYPE ECONOMICS 35 CAPITAL MARKETS DAY 2019
Slide 36: Why Focus on Contract?
WHY FOCUS ON CONTRACT? Resilient in Economic Particularly More uncertain case – higher Growth in new suited to STEM predictable High barriers markets and Underpins lifetime value business staffing and visible to entry strong as dividend and models market earnings markets profitability improve 89 % 8
Slide 37: The Economic Case – Higher Lifetime Value
THE ECONOMIC CASE – HIGHER LIFETIME VALUE SThree Contractor Contractor 40 % finishes starts Contract placement has a LTV 40% greater than permanent equivalent Total £21,200 Initial 50 % net fees Contract 42 weeks £10,200 net fees Contract consultants produced circa 50% more lifetime value per month
Slide 38: More Predictable and Visible Earnings
MORE PREDICTABLE AND VISIBLE EARNINGS Contractor order book1 17 % £94.6 3 year CAGR £77.4 million £59.7 £66.1 million million million FY2015 P12 FY2016 P12 FY2017 P12 FY2018 P12 1. Contract order book represents value of net fees until contractual end dates, assuming all contracted hours are worked.
Slide 39: High Barriers to Entry
HIGH BARRIERS TO ENTRY KNOW HOW CASH Regulatory & Tech platform compliance expertise Cash profile of an average SThree contractor 4 • Experienced team with £+ c20 professionals across key markets • Well placed to benefit, as client and candidate flight months Group payback period to quality • Scale
Slide 40: Growth in New Business Models
GROWTH IN NEW BUSINESS MODELS Freelance contractor Employed contractor • Seasoned contractor • Rolled out model in USA, Europe, Australia and Singapore • Business to business relationships • Mitigates legislative risks for clients • Dominant model in UK and Europe • Attractive margins, c.40% higher
Slide 41: How Do We Drive the Conversion Ratio?
HOW DO WE DRIVE THE CONVERSION RATIO? By building on an Focus resources Consultant Productivity Platform for success Portfolio Review already successful Execution platform we will USA Focus on the right Market intelligence tool Further opportunities focus Greater on maximising strategic markets reso
Slide 42: We Are Investing in Our Contract Growth
WE ARE INVESTING IN OUR CONTRACT GROWTH 30 May 2019 30 Nov 2018 Net working capital 2019* Net working capital* £95.2m £93.9m Permanent £0.9m Contract net Net Contract £107.0m working capital of £107.0m is driven by debt prefunding of the Dividend contractor book Final (£12.7m) Other1 £95.2m Net Asse
Slide 43: Working Capital Investment KPIs
WORKING CAPITAL INVESTMENT KPIs Each of our principle markets yield different and attractive return metrics UK Netherlands Clear opportunity for us to focus our IRR 40% IRR 17% investment according to these KPIs alongside NPV £12.3K NPV £17.2k market growth opportunities Payback – 3 months Payback –
Slide 44: We Have a Strong Track Record of Cash Generation
WE HAVE A STRONG TRACK RECORD OF CASH GENERATION FY 2014 to FY 2018 Uses of free cash Operating profit to free cash flow conversion £31.9m CAPEX £46.6m (£48.5m) £24.6m Restructuring £211.4m £209.5m (£53.8m) £15.7m LTIPs/tracker shares (£2.5m) £153.2m £89.0m Dividends Operating profit Non-cash items
Slide 45: A Clear and Disciplined Approach to Cash
A CLEAR AND DISCIPLINED APPROACH TO CASH With clear priorities for the uses of free cash flow Our priorities for uses of free cash flow Maintain a Fund Deliver a strong organic sustainable balance growth dividend sheet Support organic growth by investing in: Assess potential M&A opportunities With a
Slide 46: Counter Cyclical Cash Dynamics
COUNTER CYCLICAL CASH DYNAMICS And investment to grow contract business since 2013 +17% Strategic focus on Contract Contract Net fees 5-year CAGR 2013-2018 £55.2m £55.6m Special 11,203 dividend paid £48.5m £28.3m 5,791 £24.6m £8.7m £10.0m £6.2m £5.6m (4.1)m (9.9)m 2008 2009 2010 2011 2012 2013 2014
Slide 47: Working Capital Discipline
WORKING CAPITAL DISCIPLINE A key driver of shareholder value £1.4bn Strategic focus on Contract 50% Net working capital as a % of revenue 45% has grown at a £1.2bn slower rate than 40% revenue £1.0bn 35% 30% £0.8bn 25% £0.6bn 20% £0.4bn 15% 7% 7% 10% 5% 6% 5% 5% 6% £0.2bn 4% 3% 2% 3% 3% 5% £0.0bn 0%
Slide 48: Strong Financial Performance Since 2013
STRONG FINANCIAL PERFORMANCE SINCE 2013 Over a range of metrics1 24 % ROCE, adjusted EPS and dividend 100% 30p EPS CAGR 25p 2013-2019 consensus 80% 53 % ROCE Pre tax (%) 60% 20p Adjusted EPS (p) Dividend (p) ROCE2 40% 15p 20% 10p 5 % Dividend yield3 0% 5p FY 13 FY 14 FY 15 FY 16 FY 17 FY 18 We plan
Slide 49: In Summary
IN SUMMARY Strong financial Focus on contract Strong cash We have a clear and track record generation disciplined approach to cash 49 CAPITAL MARKETS DAY 2019
Slide 50: Q&A
Q&A 50 CAPITAL MARKETS DAY 2019
Slide 51: We Are a Scalable Platform Business
WE ARE A SCALABLE PLATFORM BUSINESS DAVID REES CHIEF SALES OFFICER
Slide 52: Our Overall Offering Can Be Thought of in Five Distinct Parts
OUR OVERALL OFFERING TO THE MARKET CAN BE THOUGHT OF IN FIVE DISTINCT PARTS CUSTOMER SKILLS RESOURCE PRODUCT TYPE SERVICE AND OPTION DELIVERY 52 CAPITAL MARKETS DAY 2019
Slide 53: Customer
CUSTOMER 53 CAPITAL MARKETS DAY 2019
Slide 54: Customer: Who Are Our Customers?
CUSTOMER Who are our customers? Our customer split STEM market • Core business - STEM talent within SME organisations 18% • Also servicing enterprise organisations 29% 29% at a global level 6,000+ $137bn $137Bn unique customers Global Global STEM STEM placed in 2019 recruitment Market Total spend 20
Slide 55: Customer
CUSTOMER Using our scaled country infrastructure to deliver to their global STEM workforce needs 55 CAPITAL MARKETS DAY 2019
Slide 56: Customer: Feedback Matters
CUSTOMER Feedback matters – pre and post placement, from clients and candidates, enhancing the service we provide Number of Feedback Responses 2019 Our NPS Score 2019 20,800 42 56 CAPITAL MARKETS DAY 2019
Slide 57: Skills
SKILLS 57 CAPITAL MARKETS DAY 2019
Slide 58: Skills: Servicing Niche and Mainstream STEM
SKILLS Servicing niche and mainstream STEM Niche STEM Mainstream STEM Market Intelligence • Salesforce • Python • Global team working together to interact with and build out the candidate community • Local teams working together to build the most comprehensive network of talent available in the mark
Slide 59: Skills: How Do We Attract the STEM Talent?
SKILLS How do we attract the STEM Talent? Mainstream STEM Talent Niche STEM Talent 1. Market specialist consultants, 1. Digital targeting and retargeting of building up the largest networks of niche and passive STEM talent with talent through utilisation of our thought leadership content relevant to
Slide 60: How Do We Attract the STEM Talent?
HOW DO WE ATTRACT THE STEM TALENT? Number of New STEM candidate 715k LinkedIn followers 1.4m applications in the last 12 months Visits to our STEM specialists 1.7m websites in the 4m on our database last 12 months 60 CAPITAL MARKETS DAY 2019
Slide 61: Resource Option
RESOURCE OPTION 61 CAPITAL MARKETS DAY 2019
Slide 62: Resource Option: Providing Clients with the Full Solution
RESOURCE OPTION Providing clients with the full solution Three distinct options to service Different resource options fitting the regional needs but a standard service globally client needs contractors were up for 25% 23% 32,000 extension in 2019 75% contractors extended with an existing 52% 74% or
Slide 63: Resource Option: Optimised Business Best Practice
RESOURCE OPTION Optimised business best practice What we have implemented The impact • First stage of onboarding for all global candidates is now automated • Ongoing journey post placement on permanent is now automated 1 2 3 • 2020 – automation of post placement journey for all contractors A standar
Slide 64: Product Type
PRODUCT TYPE 64 CAPITAL MARKETS DAY 2019
Slide 65: Products: Creating Customer Value
PRODUCTS Creating customer value Enhanced contract services High-level employment solutions service that this product is at 143% supplement clients existing workforce and a 143% premium demanding project requirements to our standard product • problem-solving expertise and experience • logistical sup
Slide 66: Service and Delivery
SERVICE AND DELIVERY 66 CAPITAL MARKETS DAY 2019
Slide 67: Service and Delivery
SERVICE AND DELIVERY Delivering to our customers in the most effective way Local delivery Near Shore delivery • Technical market and • Scaled delivery to sector specialists Enterprise/Global 5% 18% • Develops customer customers relationships • Utilising Key Account • Mid Market and SME over Enterpri
Slide 68: Allowing Us to Deliver a Unique and Compelling Value Proposition
ALLOWING US TO DELIVER A UNIQUE AND COMPELLING VALUE PROPOSITION SThree value experience Customer Candidate Speed relationships quality of placement Enhanced value experience Staffing Candidate compliance communities 68 CAPITAL MARKETS DAY 2019
Slide 69: Netherlands
NETHERLANDS KURT SCHREURS MANAGING DIRECTOR EUROPE (EXCL. DACH)
Slide 70: Our Market Opportunity
OUR MARKET OPPORTUNITY 70 CAPITAL MARKETS DAY 2019
Slide 71: STEM Staffing Market in Netherlands Worth $4.7bn
STEM STAFFING MARKET IN NETHERLANDS WORTH $4.7BN 2020E Growth Note: $USD in billions; 2018 total revenues (temporary help and place & search) 3% USA $148 5% Japan $65 $4.7bn 3% U.K. $44 2% Germany $32 STEM MARKET 2% France $32 4% Netherlands $25 2% Italy $16 2% Australia $15 • SThree total addressab
Slide 72: Strong STEM Demand Alongside Skills Shortages
STRONG STEM DEMAND ALONGSIDE SKILLS SHORTAGES Skill shortages play to our strength • There has been a surge in demand for Technology skills across the New and unfilled vacancies by sector in 2018 Netherlands Construction • 40% of companies struggle to grow Information and communication due to this s
Slide 73: Our Track Record
OUR TRACK RECORD 73 CAPITAL MARKETS DAY 2019
Slide 74: Our Track Record
OUR TRACK RECORD Total net fees Sector 13% Technology 6% Banking & Finance Energy & Engineering 53% Life Sciences 24% Other 4% 2015 2016 2017 2018 2019 E Netherlands Mix vs Group Division Mix 14% 13% 15% Netherlands Contract Group Permanent 86% 87% 75% FY18 HY19 74 CAPITAL MARKETS DAY 2019
Slide 75: Platform for Growth
PLATFORM FOR GROWTH 75 CAPITAL MARKETS DAY 2019
Slide 76: We Create Candidate Communities
WE CREATE CANDIDATE COMMUNITIES • A multi-brand, sector approach enables us to connect with highly qualified candidates across the Netherlands Large network of Building • Every brand has tripled its LinkedIn highly qualified customer loyalty followers since 2016 Long term candidates in a through qua
Slide 77: Partnering with Our Clients to Build a Better Future
PARTNERING WITH OUR CLIENTS TO BUILD A BETTER FUTURE JEAN-MICHEL JASPERS CEO JASPERS-EYRES ARCHITECTS 77 CAPITAL MARKETS DAY 2019
Slide 78: We Drive Customer Value Through Strong Relationships
WE DRIVE CUSTOMER VALUE THROUGH STRONG RELATIONSHIPS Global companies with local decisions 35% of our net fees are from our top 25 clients 78 CAPITAL MARKETS DAY 2019
Slide 79: Our Platform for Growth
OUR PLATFORM FOR GROWTH • SThree has built a successful partnership with the largest mortgage provider in the Netherlands • Stater’s services make up c.40% of all mortgages in the market 79 CAPITAL MARKETS DAY 2019
Slide 80: Our Employed Contractor Model (ECM)
OUR EMPLOYED CONTRACTOR MODEL (ECM) • We identified the potential of the How we have enhanced our ECM focus ECM in 2016 5% 9% • It represents a huge opportunity 21% for us, with margins c.50% higher than in freelance 2016 2017 2019 • ECM is a recognised model for STEM specific profiles in the Nether
Slide 81: Our People
OUR PEOPLE • Strong internal team, able to deliver Sales Headcount quality service in a mature market • Over 75 years of experience across 15% YoY increase R 10% in tenure of our senior leadership team (6 people) r CAG 4 Yea senior consultants • 30% increase in female leadership since 2016 since 201
Slide 82: Our Infrastructure for Growth
OUR INFRASTRUCTURE FOR GROWTH • Amsterdam central hub • Regional offices to service key opportunities with clients Amsterdam Utrecht Rotterdam Eindhoven 82 CAPITAL MARKETS DAY 2019
Slide 83: Our Ambition
OUR AMBITION 83 CAPITAL MARKETS DAY 2019
Slide 84: Our Ambition in the Netherlands
OUR AMBITION IN THE NETHERLANDS IS TO CONTINUE TO LEAD IN THE STEM MARKET SPACE To continue to be #1 in our space, having led in our market since 2016 Market share Revenue Largest Staffing #1 Today 7% €265 Largest STEM of STEM Staffing of STEM Staffing staffing By 2024 9% €340m #1 84 CAPITAL MARKETS
Slide 85: Summary
SUMMARY STRONG DUTCH LEADERSHIP STRONG BLUE CHIP CLIENT RELATIONSHIPS WITH FAST DELIVERY OF BEST CANDIDATES RIGHT PRODUCTS TO DELIVER GROWTH 85 CAPITAL MARKETS DAY 2019
Slide 86: DACH
DACH TIMO LEHNE MANAGING DIRECTOR
Slide 87: Our Market Opportunity
OUR MARKET OPPORTUNITY 87 CAPITAL MARKETS DAY 2019
Slide 88: STEM Staffing Market in Germany Worth $8bn
STEM STAFFING MARKET IN GERMANY WORTH $8BN 2020E Growth Note: $USD in billions; 2018 total revenues (temporary help and place & search) 3% USA $148 5% Japan $65 3% U.K. $44 $8bn 2% Germany $32 STEM MARKET 2% France $32 4% Netherlands $25 2% Italy $16 2% Australia $15 • SThree focuses exclusively on
Slide 89: The Shortage of Skilled Workers Is the Biggest Risk
THE SHORTAGE OF SKILLED WORKERS IS THE BIGGEST RISK, PARTICULARLY IN TECHNOLOGY Skilled Labour Demographic Timebomb Men Women Autumn Autumn Change 2018 2017 (% pts) >100 Skilled Labour Shortage 65% 51% 14% Fallen of World War II 90 Fallen of World War II Low birth rates during the Low birth rates du
Slide 90: Our Track Record
OUR TRACK RECORD 90 CAPITAL MARKETS DAY 2019
Slide 91: Our Track Record
OUR TRACK RECORD Total net fees 4-Year CAGR DACH Mix vs Group SThree: Germany 29% 19% Switzerland Austria Germany 1% Other staffing 69% 1% 2015 2016 2017 2018 2019 E market: 4% Division mix Sector mix 1% 16% 1% Technology Banking & Finance 37% 35% Energy & Engineering FY 2018 H1 2019 Contract 17% Li
Slide 92: Revenue Growth of the Top Recruitment Companies
REVENUE GROWTH OF THE TOP 10 RECRUITMENT COMPANIES WITHIN TECHNOLOGY AND AS A WHOLE The recent surge in Technology employment with skill shortages plays to our strengths Technology specialists STEM specialists (incl Technology) Etengo Xetengo 19.1% 17.4% Sthree SThree 16.1% 18.2% Sol.com 6.9% 6.8% F
Slide 93: The Right Business Mix
THE RIGHT BUSINESS MIX Core business is the German Mittelstand Enterprise Segmented delivery • Strong pricing 5,000 employees+ Corporate • Owning the process accounts Account managers & delivery teams • No dependency on a handful of accounts • No dependence on certain industries Mid-market 1,000 – 5
Slide 94: Platform for Growth
PLATFORM FOR GROWTH 94 CAPITAL MARKETS DAY 2019
Slide 95: Diversify: Power of the Multi-Brand Model
DIVERSIFY: POWER OF THE MULTI-BRAND MODEL – CANDIDATE SKILL & CLIENT INDUSTRY FOCUS • Great vehicle for scale allowing us to tackle the market from different sides Client Industry Focus and optimise our sizes of sales units. Delivering industry experts into specific industries Candidate Delivering c
Slide 96: Select: Power of Data
SELECT: POWER OF DATA Raw data Algorithm Resulting data standard Results Precise insight of 1 investment cases in regard to skills and industries Internal data (margin, Enriched candidate Semantic algorithm Interface showing skill, industry, other data 2 optimal resource characteristics) distributio
Slide 97: Amplify: Candidate Communities
AMPLIFY: CANDIDATE COMMUNITIES Building the most comprehensive candidate network Cloud as an example: 24% CAGR: German public cloud services revenue forecast by service type ($billions) • Easily able to staff the entire value chain • 68 staff covering this market • Double existing workforce until 20
Slide 98: Our People
OUR PEOPLE How we find, retain, and develop great people eNPS Score Employer of choice in Germany • Well equipped internal recruitment team 54 to deliver required growth • Up to 20 years recruitment knowledge • Top 30 DACH employees with an average SThree tenure of 11 years • Experience of the top 3
Slide 99: Our Infrastructure for Growth
OUR INFRASTRUCTURE FOR GROWTH • World class infrastructure provides us the platform to drive growth Hanover • 2 new office openings in 2019 Hamburg Berlin Dusseldorf Frankfurt Nuremberg Stuttgart Munich 99 CAPITAL MARKETS DAY 2019
Slide 100: Our Ambition
OUR AMBITION 100 CAPITAL MARKETS DAY 2019
Slide 101: Our Ambition Is to Grow Our Overall Market Share
OUR AMBITION IS TO GROW OUR OVERALL MARKET SHARE WITH OUR MULTI-BRAND MODEL To lead in the niche STEM space through continued investment and to grow our overall market share with our multi-brand Market share Revenue Largest Staffing Market share model. €312 #10 Today 5% million of on SIA’s #3 of STE
Slide 102: Summary
SUMMARY STRONG TRACK RECORD WITH CLEAR PLAN AND PLATFORM FOR GROWTH ATTRACTIVE MARKET CHARACTERISTICS GREAT CLIENT AND CANDIDATE PROPOSITION 102 CAPITAL MARKETS DAY 2019
Slide 103: USA
USA MORGAN KAVANAGH MANAGING DIRECTOR, USA
Slide 104: Our Market Opportunity
OUR MARKET OPPORTUNITY 104 CAPITAL MARKETS DAY 2019
Slide 105: Our Total Addressable US Market Is $46.1 Billion
OUR TOTAL ADDRESSABLE US MARKET IS $46.1BILLION 2020E Note: $USD in billions; 2018 total revenues Professional Staffing: $86 billion (Contract and Permanent) Growth (temporary help and place & search) $ in billions 3% USA $148 $2.8 Technology $34.1 5% Japan $65 Healthcare $18.3 3% U.K. $44 Energy &
Slide 106: We Are Focused on the Most Attractive Segment of the World's Largest Staffing Market
WE ARE FOCUSED ON THE MOST ATTRACTIVE SEGMENT OF THE WORLD’S LARGEST STAFFING MARKET STEM growth Supply constraints Flexible working trends 1.7x 13:1 73% of executives expect STEM jobs rate of growth contingent workers advertised to each vs Non-STEM will substantially unemployed STEM employment repl
Slide 107: We Have a Substantial Opportunity to Increase Market Share
WE HAVE A SUBSTANTIAL OPPORTUNITY TO INCREASE MARKET SHARE Industry 2018 Market Size & Growth Rate 2018 SThree Market Share (1) 2018 Industry Ranking (1)(2) NR Market share: $31.0 Technology 2019 2020 Billion 4% 3% <1% $75 million $8.3 #16 Market share: Energy & 2019 2020 Engineering Billion 4% 3% <
Slide 108: Our Track Record
OUR TRACK RECORD 108 CAPITAL MARKETS DAY 2019
Slide 109: Our Track Record
OUR TRACK RECORD Total Net Fees Sector Mix 4% 14% Technology 13% Banking & Finance Energy & Engineering 40% Life Sciences 3 year CAGR Other SThree USA – 12% 29% FY 2016 FY 2017 FY 2018 FY 2019 E STEM Staffing USA – 4% (1) USA Mix vs Group Division Mix USA 22% 22% 27% Contract Permanent 73% 78% 78% H
Slide 110: Platform for Growth
PLATFORM FOR GROWTH 110 CAPITAL MARKETS DAY 2019
Slide 111: Our Focus on Scalable STEM Niches Creates a Differentiated Customer Value Proposition
OUR FOCUS ON SCALABLE STEM NICHES CREATES A DIFFERENTIATED CUSTOMER VALUE PROPOSITION • Focus on deep candidate reach in STEM niches that are: • Scalable • Supply-constrained • Why we win • Against large competitors - greater focus • Against niche competitors - maximising the advantages of scale and
Slide 112: The Power of Our Candidate Communities
THE POWER OF OUR CANDIDATE COMMUNITIES STEPHANIE HERRERA GLOBAL VICE PRESIDENT SALESFORCE PRACTICE COMPUTER FUTURES 112 CAPITAL MARKETS DAY 2019
Slide 113: Our Specialist Brands Create Deeper Customer Relationships
OUR SPECIALIST BRANDS CREATE DEEPER CUSTOMER RELATIONSHIPS WITH SUSTAINABLE VALUE • Standardised delivery model drives customer penetration and scale • Use of NPS to gather feedback and 35% consistently improve service quality up YoY Net Fees of top 25 clients NPS Score 54 113 CAPITAL MARKETS DAY 20
Slide 114: Our Expertise in Contingent Workforce Compliance Creates Value
OUR EXPERTISE IN CONTINGENT WORKFORCE COMPLIANCE CREATES VALUE THROUGH RISK MITIGATION • Customers face significant risk relating to complex federal, state, and local regulations governing worker classifications and entitlements • provide exceptional contingent workforce management • thought leaders
Slide 115: We Have Established Contract Product Lines and Are Adding Higher Value Services
WE HAVE ESTABLISHED CONTRACT PRODUCT LINES AND WE ARE ADDING HIGHER VALUE SERVICES Our mature employed contractor model Successfully piloted enhanced employment services delivers exceptional contractor experience product offering to engineering sector customers 15% Deal Value Deal Margin 2019 Employ
Slide 116: We Have a Scalable Process to Find, Retain and Develop Great People
WE HAVE A SCALABLE PROCESS TO FIND, RETAIN AND DEVELOP GREAT PEOPLE • Mature graduate recruiting platform Sales Headcount • Exceptional training Avg tenure of 3-Year CAGR 13% management • eNPS to gather employee feedback and improve employee experience 16 yrs FY 2016 FY 2017 FY 2018 FY 2019 E • Tenu
Slide 117: We Have an Office Network to Support Substantial Further Growth
WE HAVE AN OFFICE NETWORK TO SUPPORT SUBSTANTIAL FURTHER GROWTH • 9 offices in the top 20 largest STEM employment markets in the US (1) Minneapolis Chicago • No need for significant further investment in office footprint Boston • Operate a Hub & Spoke model to New York facilitate customer relationsh
Slide 118: Our Ambition
OUR AMBITION 118 CAPITAL MARKETS DAY 2019
Slide 119: Our Platform for Growth Will Enable Us to Double Market Share by 2024
OUR PLATFORM FOR GROWTH WILL ENABLE US TO DOUBLE MARKET SHARE BY 2024 • Double our revenue • Double our market share to 1.3% of Market share Revenue Largest Staffing Largest STEM the STEM staffing market • Ranking SThree US as a Top 25 $300 #63 #22 Today staffing company 0.6% million of on SIA’s lar
Slide 120: Summary
SUMMARY FAVOURABLE MARKET DYNAMICS Secular trends in STEM talent and flexible working, with focus on the most attractive STEM specialisms STRONG TRACK RECORD Growth 3 x faster than US STEM staffing market, while balancing further towards Contract HIGHLY SCALABLE PLATFORM FOR GROWTH Customer value pr
Slide 121: Q&A
Q&A 121 CAPITAL MARKETS DAY 2019
Slide 122: Our Client and Contractor Partnership
OUR CLIENT AND CONTRACTOR PARTNERSHIP TOM JORDAANS SENIOR COMMISSIONING MANAGER PAUL SCHNECK DEPUTY COMMISSIONING MANAGER HSM 122 CAPITAL MARKETS DAY 2019
Slide 123: Group Ambition
GROUP AMBITION 2024 Market share of To grow Group Conversion ratio CR%2 STEM market share by Range of 50% 21-24% To 3%1 by 2024 (2018: 2%) 2018: 16.8% Free cashflow CR%3 To drive a Free People and society Cashflow CR% of • To maintain L&D spend at 5% of Operating Profit at least 75% • To grow produc
Slide 124: We Are at the Centre of STEM
WE ARE AT THE CENTRE OF STEM
Slide 125: Right Platform, Right Markets, Right Ambition
RIGHT PLATFORM RIGHT MARKETS RIGHT AMBITION 125 CAPITAL MARKETS DAY 2019