Sthree Plc · LSE:STEM
Sthree — FY2011 Earnings Presentation
56 slides from Sthree's earnings presentation, January 2012
Slide 1: Full Year Results Presentation 2011
FULL YEAR RESULTS PRESENTATION 2011 RESULTS FOR THE YEAR ENDED 27 NOVEMBER 2011
Slide 2: SThree Profiles
FULL YEAR RESULTS PRESENTATION 2011 RESULTS FOR THE YEAR ENDED 27 NOVEMBER 2011 STHREE PROFILES 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 Com
Slide 3: Introduction & Overview
PRELIMINARY RESULTS PRESENTATION 2011 PRELIM RESULTS FOR THE YEAR ENDED 27 NOVEMBER 2011 INTRODUCTION & OVERVIEW www.SThree.com | SThree plc 3
Slide 4: Key Facts
FULL YEAR RESULTS PRESENTATION 2011 RESULTS FOR THE YEAR ENDED 27 NOVEMBER 2011 KEY FACTS • Founded in 1986, floated in 2005 • 100% organic growth through multi brand model • Pure play specialist staffing – average perm salary £55k, contract pro rata £93k • 60 offices, 38 non UK, 63% of GP internati
Slide 5: Full Year 2011: An Overview
FULL YEAR RESULTS PRESENTATION 2011 RESULTS FOR THE YEAR ENDED 27 NOVEMBER 2011 FULL YEAR 2011: AN OVERVIEW • A strong performance for the year, despite slowing growth in Q4 • PBT up 40% to £30.3m (2010: £21.6m), in line with consensus • Greater geographical diversification, with non-UK&I share of g
Slide 6: Full Year 2011: Financial Highlights
FULL YEAR RESULTS PRESENTATION 2011 RESULTS FOR THE YEAR ENDED 27 NOVEMBER 2011 FULL YEAR 2011: FINANCIAL HIGHLIGHTS Actual 2011 2010 LFL Growth Growth Revenue £542.5m £474.5m +14.3% +14.2% Gross Profit £195.5m £166.4m +17.5% +17.3% Operating Profit £30.0m £21.2m +41.2% +41.5% Conversion ratio 15.3%
Slide 7: 22 UK Offices
FULL YEAR RESULTS PRESENTATION 2011 RESULTS FOR THE YEAR ENDED 27 NOVEMBER 2011 22 UK OFFICES • 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 •
Slide 8: 24 European Offices
FULL YEAR RESULTS PRESENTATION 2011 RESULTS FOR THE YEAR ENDED 27 NOVEMBER 2011 24 European Offices New Offices Opened In Pre 2011 office locations: 2011 y Antwerp y Amsterdam y Frankfurt • Computer Futures (2011) • Computer Futures (2000) • Computer Futures (1999) • Progressive (2002)/Orgtel (2007)
Slide 9: 14 RoW Offices
FULL YEAR RESULTS PRESENTATION 2011 RESULTS FOR THE YEAR ENDED 27 NOVEMBER 2011 14 RoW Offices New Offices Opened In Pre 2011 office locations: 2011 y Moscow • Perth • Dubai • Progressive/Huxley (2011) • Progressive (2010) • Huxley (2008) y Mumbai • San Francisco • Hong Kong • Huxley (2011) • Real S
Slide 10: Key Performance Indicators: Permanent
FULL YEAR RESULTS PRESENTATION 2011 RESULTS FOR THE YEAR ENDED 27 NOVEMBER 2011 KEY PERFORMANCE INDICATORS: PERMANENT Growth in Permanent Placement Volume Growth in Permanent Average Fee 12,000 £14,000 +7.5% 13,061 13,028 12,123 10,236 11,930 £12,000 10,000 9,568 10,355 +13.5% £10,000 9,780 8,000 7,
Slide 11: Key Performance Indicators: Contract
FULL YEAR RESULTS PRESENTATION 2011 RESULTS FOR THE YEAR ENDED 27 NOVEMBER 2011 KEY PERFORMANCE INDICATORS: CONTRACT Growth in Contract Runners Growth in Gross Profit Per Day Rate 7,000 £100 +2.8% £90 £86.70 £86.58 6,000 5,745 £84.70 £84.20 5,662 £78.30 £80 +7.6% £71.40 5,000 4,719 4,692 £70 £64.90
Slide 12: Gross Profit & Gross Margin
FULL YEAR RESULTS PRESENTATION 2011 RESULTS FOR THE YEAR ENDED 27 NOVEMBER 2011 GROSS PROFIT & GROSS MARGIN Gross Profit (£m) Gross Margin % £250 40% +0.9% pts 218.9 +17.3% 36.0% 36.0% 34.9% 34.7% 35.1% 34.5% 35% 195.5 195.2 33.0% £200 182.7 171.2 30% 166.4 £150 25% 135.5 20% £100 15% 10% £50 5% £0
Slide 13: Historical Operating Profit & Conversion Ratio
FULL YEAR RESULTS PRESENTATION 2011 RESULTS FOR THE YEAR ENDED 27 NOVEMBER 2011 HISTORICAL OPERATING PROFIT & CONVERSION RATIO Operating Profit (£m) Conversion Ratio (operating profit as a % of gross profit) 35% £60 56.8 30.3% 52.3 30% 28.2% 28.6% £50 25.9% 25% 41.0 22.9% 22.0% £40 20% 29.5 30.0 £30
Slide 14: Geographic Analysis by Location of Client
FULL YEAR RESULTS PRESENTATION 2011 RESULTS FOR THE YEAR ENDED 27 NOVEMBER 2011 GEOGRAPHIC ANALYSIS BY LOCATION OF CLIENT Gross Profit Growth by Region* FY 2011 £195.5m 100% 13% +94% 80% FY 2011 FY 2010 37% UK&I 23% 60% Benelux +47% France 40% Germany ROW +22% 7% 20% 20% FY 2010 £166.4m +4% 10% 0% (
Slide 15: Permanent/Contract Analysis
FULL YEAR RESULTS PRESENTATION 2011 RESULTS FOR THE YEAR ENDED 27 NOVEMBER 2011 PERMANENT/CONTRACT ANALYSIS Gross Profit Growth In Permanent/Contract GP* FY 2011 £195.5m 30% FY 2011 FY 2010 25% +24% 20% 15% +13% +12% 48% 52% 10% 5% 0% Perm Contract (5%) FY 2010 £166.4m (10%) (15%) (14%) (20%) Perm C
Slide 16: Sector Analysis by Candidate Skillset
FULL YEAR RESULTS PRESENTATION 2011 RESULTS FOR THE YEAR ENDED 27 NOVEMBER 2011 SECTOR ANALYSIS BY CANDIDATE SKILLSET Gross Profit Growth In ICT/Non ICT GP* FY 2011 £195.5m 40% 4% ICT FY 2011 FY 2010 9% +31% Engineering & 4% 30% Energy +24% 7% Banking 20% Accountancy & +13% Finance 60% Pharmaceutica
Slide 17: Business Breakdown by Client Industry Sector
FULL YEAR RESULTS PRESENTATION 2011 RESULTS FOR THE YEAR ENDED 27 NOVEMBER 2011 BUSINESS BREAKDOWN BY CLIENT INDUSTRY SECTOR Full Year 2010 Full Year 2011 Financial Other Financial Other Services 6% Services 5% ICT ICT 6% 6% Natural 19% Natural 19% Resources Resources 8% 10% Retail & Retail & Consum
Slide 18: Headcount
FULL YEAR RESULTS PRESENTATION 2011 RESULTS FOR THE YEAR ENDED 27 NOVEMBER 2011 HEADCOUNT Total -28% Total -10% Total +6% Total +11% Total +17% Total +8% Total +22% UK -42% UK -16% UK +5% UK +3% UK +10% UK +3% UK +5% Int’l -10% Int’l -5% Int’l +6% Int’l +18% Int’l +25% Int’l +15% Int’l +41% Vs. year
Slide 19: Sales Headcount
FULL YEAR RESULTS PRESENTATION 2011 RESULTS FOR THE YEAR ENDED 27 NOVEMBER 2011 SALES HEADCOUNT Full Year 2008 Full Year 2011 35% 42% 58% 65% UK International Geographical mix of sales heads in recent years radically altered from 2008 prior peak www.SThree.com | SThree plc 19
Slide 20: Business Mix – A Transformation
FULL YEAR RESULTS PRESENTATION 2011 RESULTS FOR THE YEAR ENDED 27 NOVEMBER 2011 BUSINESS MIX – A TRANSFORMATION 2008 2010 2011 24% 22% 41% 59% 76% 78% UK, ICT Gross Profit Other sectors and geographies Continued geographical & sector diversification derisks our business, longer established sectors/g
Slide 21: 2011 Financial Results
PRELIMINARY RESULTS PRESENTATION 2011 PRELIM RESULTS FOR THE YEAR ENDED 27 NOVEMBER 2011 2011 FINANCIAL RESULTS www.SThree.com | SThree plc 21
Slide 22: Income Statement
FULL YEAR RESULTS PRESENTATION 2011 RESULTS FOR THE YEAR ENDED 27 NOVEMBER 2011 INCOME STATEMENT 2011 2010 Actual LFL Growth* £m £m Growth Revenue 542.5 474.5 +14.3% +14.2% Gross Profit 195.5 166.4 +17.5% +17.3% Operating Profit 30.0 21.2 +41.2% +41.5% Net finance income 0.3 0.4 - Profit before tax
Slide 23: Balance Sheet
FULL YEAR RESULTS PRESENTATION 2011 RESULTS FOR THE YEAR ENDED 27 NOVEMBER 2011 BALANCE SHEET Balance Sheet New £20m revolving credit facility 27 Nov 2011 28 Nov 2010 with RBS until January 2017 £m Goodwill & intangibles 8.5 10.2 • £20m committed • Libor +130bp Property, plant & equipment 5.3 5.4 De
Slide 24: Cash Flow
FULL YEAR RESULTS PRESENTATION 2011 RESULTS FOR THE YEAR ENDED 27 NOVEMBER 2011 CASH FLOW 2011 2010 Cash Flow £'m £'m Operating profit 30.0 21.2 Depreciation and amortisation 7.7 6.3 Share awards charge & other non cash items 2.5 1.8 Increase in receivables (12.0) (3.7) Increase in payables & provis
Slide 25: Earnings Per Share
FULL YEAR RESULTS PRESENTATION 2011 RESULTS FOR THE YEAR ENDED 27 NOVEMBER 2011 EARNINGS PER SHARE Change 2011 2010 % Profit After Tax £20.3m £14.3m 41.9% Minority Interest* - (£0.1m) Profit attributable to equity holders of the company £20.3m £14.2m 42.6% for basic EPS 120.6m 119.9m +0.6% Weighted
Slide 26: Summary & 2012 Outlook
PRELIMINARY RESULTS PRESENTATION 2011 PRELIM RESULTS FOR THE YEAR ENDED 27 NOVEMBER 2011 SUMMARY & 2012 OUTLOOK www.SThree.com | SThree plc 26
Slide 27: Contract Runners – Comparison to Prior Years
FULL YEAR RESULTS PRESENTATION 2011 RESULTS FOR THE YEAR ENDED 27 NOVEMBER 2011 CONTRACT RUNNERS – COMPARISON TO PRIOR YEARS Indexed Contract Runners - FY 5 Year Analysis (Annual Trend based on P12 Nov Year End Runners) 130% 120% 120% 110% 108% 105% 100% 92% 101% 90% 80% 70% 72% 60% t ch r r ay r ry
Slide 28: Summary & 2012 Outlook
FULL YEAR RESULTS PRESENTATION 2011 RESULTS FOR THE YEAR ENDED 27 NOVEMBER 2011 SUMMARY & 2012 OUTLOOK • Global economic sentiment has impacted demand for the Group’s services across a number of markets • Market conditions remain in far better shape than in 2009 trough • Focus is on driving producti
Slide 29: The Future of SThree
PRELIMINARY RESULTS PRESENTATION 2011 PRELIM RESULTS FOR THE YEAR ENDED 27 NOVEMBER 2011 THE FUTURE OF STHREE www.SThree.com | SThree plc 29
Slide 30: SThree: Evolving the Multi Brand Model
FULL YEAR RESULTS PRESENTATION 2011 RESULTS FOR THE YEAR ENDED 27 NOVEMBER 2011 STHREE: EVOLVING THE MULTI BRAND MODEL Niche Specialisations • ICT 28% • Engineering & Energy • Banking 28% • Pharmaceuticals & 27% Biotechnology • Accountancy 17%* • Job board SThree has grown 100% organically through n
Slide 31: Two Types of Specialist Staffing Market
FULL YEAR RESULTS PRESENTATION 2011 RESULTS FOR THE YEAR ENDED 27 NOVEMBER 2011 TWO TYPES OF SPECIALIST STAFFING MARKET – DEFINED BY CANDIDATE MOBILITY PHARMACEUTICALS BANKING ICT OIL & GAS BANKING ACCOUNTANCY PHARMACEUTICALS & FINANCE OIL & GAS/MINING LOCAL GLOBAL Global candidates provide an abili
Slide 32: Profile of International Growth
FULL YEAR RESULTS PRESENTATION 2011 RESULTS FOR THE YEAR ENDED 27 NOVEMBER 2011 PROFILE OF INTERNATIONAL GROWTH THE GROUP’S EXPANSION HAS FOUR MAJOR DIMENSIONS: The majority of planned growth comes from additional heads in existing locations, in both existing and new sectors. Increase headcount in a
Slide 33: Planned & Potential Office Openings 2012/13
FULL YEAR RESULTS PRESENTATION 2011 RESULTS FOR THE YEAR ENDED 27 NOVEMBER 2011 PLANNED & POTENTIAL OFFICE OPENINGS 2012/13 DUE TO OPEN POSSIBLE 2013 LONG LIST OSLO BRISBANE SHANGHAI TOKYO RIO DE JANEIRO JOHANNESBURG MEXICO CITY BUENOS AIRES SAN DIEGO LYON VIENNA VANCOUVER CALGARY TORONTO GENEVA KUA
Slide 34: Indicative Office Rollout 2012 & 2013
INDICATIVE OFFICE ROLLOUT 2012 & 2013 Calgary Toronto Vancouver San Diego Austin Mexico City Rio de Janeiro Buenos Aires EXISTING LOCATIONS USA United Kingdom Germany Boston Aberdeen Leeds Dusseldorf Chicago Birmingham London Frankfurt Houston Bristol Manchester Hamburg New York Edinburgh Reading Mu
Slide 35: Indicative Office Rollout Medium Term
INDICATIVE OFFICE ROLLOUT MEDIUM TERM Montreal Atlanta Dallas Denver Lima Santiago EXISTING LOCATIONS USA United Kingdom Boston Aberdeen Leeds Chicago Birmingham London Houston Bristol Manchester New York Edinburgh Reading San Francisco Glasgow Brazil Ireland Sao Paulo Dublin Germany Dusseldorf Fran
Slide 36: Business Mix – Geographical & Sectoral
FULL YEAR RESULTS PRESENTATION 2011 RESULTS FOR THE YEAR ENDED 27 NOVEMBER 2011 BUSINESS MIX – GEOGRAPHICAL & SECTORAL 2008 2011 Indicative Future 4% 13% Mix 23% 30% 36% 41% 55% 51% 47% UK&I Europe ROW 2% 8% 8% 14% 2% 9% 6% 7% 7% 7% 49% 60% 16% 77% 28% ICT Engineering Banking Pharmaceuticals & Accou
Slide 37: Questions
PRELIMINARY RESULTS PRESENTATION 2011 PRELIM RESULTS FOR THE YEAR ENDED 27 NOVEMBER 2011 QUESTIONS Thank you for listening, please feel free to ask any questions www.SThree.com | SThree plc 37
Slide 38: Regional Trading Metrics
PRELIMINARY RESULTS PRESENTATION 2011 PRELIM RESULTS FOR THE YEAR ENDED 27 NOVEMBER 2011 REGIONAL TRADING METRICS www.SThree.com | SThree plc 38
Slide 39: UK&I Trading Metrics
FULL YEAR RESULTS PRESENTATION 2011 RESULTS FOR THE YEAR ENDED 27 NOVEMBER 2011 UK&I TRADING METRICS Runners At Period End GPDR - Constant Currency ICT/Non ICT Split YTD 2011** +1.1% (0.3%) 3,000 £80.00 £72.58 £72.39 Non ICT 36% 2,367 2,393 £70.00 2,500 £60.00 2,000 £50.00 ICT 1,500 £40.00 64% £30.0
Slide 40: Benelux Trading Metrics
FULL YEAR RESULTS PRESENTATION 2011 RESULTS FOR THE YEAR ENDED 27 NOVEMBER 2011 BENELUX TRADING METRICS Runners At Period End GPDR - Constant Currency ICT/Non ICT Split YTD 2011** (1.5%) +1.2% 1,000 927 913 £120.00 Non ICT £97.29 £98.43 £100.00 40% 800 £80.00 ICT 600 60% £60.00 400 £40.00 200 Perm/C
Slide 41: Germany Trading Metrics
FULL YEAR RESULTS PRESENTATION 2011 RESULTS FOR THE YEAR ENDED 27 NOVEMBER 2011 GERMANY TRADING METRICS Runners At Period End GPDR - Constant Currency ICT/Non ICT Split YTD 2011** +0.4% +18.8% 800 727 £120.00 £112.38 £112.79 612 £100.00 Non ICT 45% 600 ICT £80.00 55% 400 £60.00 £40.00 200 Perm/Contr
Slide 42: France Trading Metrics
FULL YEAR RESULTS PRESENTATION 2011 RESULTS FOR THE YEAR ENDED 27 NOVEMBER 2011 FRANCE TRADING METRICS Runners At Period End GPDR - Constant Currency ICT/Non ICT Split YTD 2011** Non ICT +20.7% +2.5% 17% £100.00 £88.42 £90.62 450 403 £80.00 334 300 £60.00 ICT 83% £40.00 150 £20.00 Perm/Contract Spli
Slide 43: RoW Trading Metrics
FULL YEAR RESULTS PRESENTATION 2011 RESULTS FOR THE YEAR ENDED 27 NOVEMBER 2011 ROW TRADING METRICS Runners At Period End GPDR - Constant Currency ICT/Non ICT Split YTD 2011** +115.1% +16.0% 300 £120.00 £110.20 256 ICT £100.00 £95.02 42% £80.00 Non ICT 150 £60.00 58% 119 £40.00 Perm/Contract Split Y
Slide 44: Supplementary Material
PRELIMINARY RESULTS PRESENTATION 2011 PRELIM RESULTS FOR THE YEAR ENDED 27 NOVEMBER 2011 SUPPLEMENTARY MATERIAL www.SThree.com | SThree plc 44
Slide 45: SThree Management Structure
FULL YEAR RESULTS PRESENTATION 2011 RESULTS FOR THE YEAR ENDED 27 NOVEMBER 2011 STHREE MANAGEMENT STRUCTURE www.SThree.com | SThree plc 45
Slide 46: PBT Growth Post Dot Com Crash 2003–2008
FULL YEAR RESULTS PRESENTATION 2011 RESULTS FOR THE YEAR ENDED 27 NOVEMBER 2011 PBT GROWTH POST DOT COM CRASH 2003 – 2008 60 56.0 50.3 50 56% CAGR 2003 to 2008 40.3 40 34% CAGR PBT (£m) 30 29.5 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.ST
Slide 47: Historical Gross Profit & Gross Margin
FULL YEAR RESULTS PRESENTATION 2011 RESULTS FOR THE YEAR ENDED 27 NOVEMBER 2011 HISTORICAL GROSS PROFIT & GROSS MARGIN Gross Profit (£’m) Gross Margin (%) 40% 36.0% 250 34.5% 34.9% 34.7% 35.1% 35% 34.0% 33.2% 33.0% 218.9 31.0% 30.8% 31.3% 195.5 30% 200 182.7 171.2 166.4 50% 42% 40% 44% 46% 49% 51% 4
Slide 48: Health of Market: KPIs – Permanent Hires Starting Within The Month
FULL YEAR RESULTS PRESENTATION 2011 RESULTS FOR THE YEAR ENDED 27 NOVEMBER 2011 HEALTH OF MARKET: KPIS Permanent Hires Starting Within The Month 30% 26% 25% 25% 25% 23% 22% 22% 21% 21% 20% 20% 20% 20% 20% 19% 18% 17% 17% 17% 16% 16% UK 15% 14% Intl 10% 5% 0% 2007 H1 2007 H2 2008 H1 2008 H2 2009 H1 2
Slide 49: Health of Market: KPIs – Permanent Placement Dropouts
FULL YEAR RESULTS PRESENTATION 2011 RESULTS FOR THE YEAR ENDED 27 NOVEMBER 2011 HEALTH OF MARKET: KPIS Permanent Placement ‘Dropouts’ 14% 13% 13% 13% 12% 12% 11% 11% 11% 11% 11% 10% 10% 10% 10% 9% 9% 8% 8% 8% 8% 8% 7% 7% UK Intl 6% 4% 2% 0% 2007 H1 2007 H2 2008 H1 2008 H2 2009 H1 2009 H2 2010 H1 201
Slide 50: Candidate Salary Positioning
FULL YEAR RESULTS PRESENTATION 2011 RESULTS FOR THE YEAR ENDED 27 NOVEMBER 2011 CANDIDATE SALARY POSITIONING Permanent Salary Analysis Full Year 2010 £100k+ Full Year 2011 £70-100k £100k+ 2% £0-30k £0-30k 8% £70-100k 3% 15% 11% 8% £50-70k 23% £50-70k 24% £30-40k 29% £30-40k 29% £40-50k £40-50k 23% 2
Slide 51: Cost Base Analysis for 2011
FULL YEAR RESULTS PRESENTATION 2011 RESULTS FOR THE YEAR ENDED 27 NOVEMBER 2011 COST BASE ANALYSIS FOR 2011 Cost Base Payroll Costs IT & Other Professional 4% Central Suppo rt 10% Co sts 28% Advertising 2% Property 10% Sales Related Co sts Payroll 72% 74% The Group operates a relatively low fixed sa
Slide 52: Euro/GBP Exchange Rate
FULL YEAR RESULTS PRESENTATION 2011 RESULTS FOR THE YEAR ENDED 27 NOVEMBER 2011 EURO/GBP EXCHANGE RATE Year ended 27 Nov 2011 Year ended 28 Nov 2010 Year ended 29 Nov 2009 Average Rate Closing Rate Average Rate Closing Rate Average Rate Closing Rate Euro € 0.8698 0.8577 0.8691 0.8499 0.8977 0.9087 1
Slide 53: Sector Diversification Leads to Global Opportunities
FULL YEAR RESULTS PRESENTATION 2011 RESULTS FOR THE YEAR ENDED 27 NOVEMBER 2011 SECTOR DIVERSIFICATION LEADS TO GLOBAL OPPORTUNITIES SINGAPORE The Glasgow/Singapore Example IT SCOTLAND SCOTLAND SE ASIA SE ASIA IT OIL & OIL & OIL & SINGAPORE Based Glasgow GAS GAS GAS MIDDLE OFFICE Based Glasgow Virtu
Slide 54: Performance Management Systems
FULL YEAR RESULTS PRESENTATION 2011 RESULTS FOR THE YEAR ENDED 27 NOVEMBER 2011 PERFORMANCE MANAGEMENT SYSTEMS Actual screenshot Permanent Consultant www.SThree.com | SThree plc 54
Slide 55: Even when markets are mature, churn drives growth
FULL YEAR RESULTS PRESENTATION 2011 RESULTS FOR THE YEAR ENDED 27 NOVEMBER 2011 VACANCY VACANCY FILLED FILLED NEW JOB DONOR DONOR BUSINESS 3 HAS VACANCY 3 1 BUSINESS 1 HAS VACANCY VACANCY FILLED VACANCY FILLED 2 DONOR BUSINESS 2 HAS VACANCY Even when markets are mature, churn drives growth www.SThre
Slide 56: Full Year Results Presentation 2011
FULL YEAR RESULTS PRESENTATION 2011 RESULTS FOR THE YEAR ENDED 27 NOVEMBER 2011 www.SThree.com | SThree plc 56