Sthree Plc · LSE:STEM
Sthree — H1 2012 Earnings Presentation
48 slides from Sthree's earnings presentation, July 2012
Slide 1: Half Year Results Presentation 2012
HALF YEAR RESULTS PRESENTATION 2012 RESULTS FOR SIX MONTHS ENDED 27 MAY 2012
Slide 2: SThree Profiles
INTERIM RESULTS PRESENTATION 2012 RESULTS FOR SIX MONTHS ENDED 27 MAY 2012 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 Computer
Slide 3: Introduction & Overview
INTERIM RESULTS PRESENTATION 2012 RESULTS FOR SIX MONTHS ENDED 27 MAY 2012 INTRODUCTION & OVERVIEW www.SThree.com | SThree plc 3
Slide 4: Key Facts
INTERIM RESULTS PRESENTATION 2012 RESULTS FOR SIX MONTHS ENDED 27 MAY 2012 KEY FACTS • Founded in 1986, floated in 2005 • 100% organic growth through multi brand model • Pure play specialist staffing – average perm salary £56k, contract pro rata £93k • 64 offices, 42 non UK, 66% of GP international
Slide 5: H1 2012: An Overview
INTERIM RESULTS PRESENTATION 2012 RESULTS FOR SIX MONTHS ENDED 27 MAY 2012 H1 2012: AN OVERVIEW • A satisfactory performance, despite slowing growth in Q2 • Permanent GP up 14%* and up 12%* in Q2 • Contract up 10%* and up 7%* in Q2 • Permanent fees and contract GP day rates both improved* • Four new
Slide 6: H1 2012: Financial Highlights
INTERIM RESULTS PRESENTATION 2012 RESULTS FOR SIX MONTHS ENDED 27 MAY 2012 H1 2012: FINANCIAL HIGHLIGHTS Actual H1 2012 H1 2011 LFL Growth Growth Revenue £278.4m £254.9m +9.2% +10.4% Gross Profit £99.9m £90.0m +11.0% +12.2% Operating Profit £9.1m £11.0m -16.7% -16.0% Conversion ratio 9.2% 12.2% -3.0
Slide 7: 22 UK Offices
INTERIM RESULTS PRESENTATION 2012 RESULTS FOR SIX MONTHS ENDED 27 MAY 2012 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 • Leeds
Slide 8: 25 European Offices
INTERIM RESULTS PRESENTATION 2012 RESULTS FOR SIX MONTHS ENDED 27 MAY 2012 25 European Offices New Offices Opened In Marseille Paris H1 2012 • Computer Futures (2009) • Computer Futures (2003) Oslo • Progressive (2006)/ • Progressive Stuttgart Real Staffing Group • Computer Futures (2009)/Progressiv
Slide 9: 17 RoW Offices
INTERIM RESULTS PRESENTATION 2012 RESULTS FOR SIX MONTHS ENDED 27 MAY 2012 17 RoW Offices New Offices Opened In Existing Offices H1 2012 San Diego • Perth • Dubai • Real Staffing Group • Progressive (2010) • Huxley (2008) Rio De Janeiro • San Francisco • Hong Kong • Progressive • Real Staffing Group
Slide 10: Key Performance Indicators: Permanent
INTERIM RESULTS PRESENTATION 2012 RESULTS FOR SIX MONTHS ENDED 27 MAY 2012 KEY PERFORMANCE INDICATORS: PERMANENT Growth in Permanent Placement Volume Growth in Permanent Average Fee (£) 6,000 £16,000 +8.2% 5,008 13,573 13,712 £14,000 5,000 4,580 12,672 11,838 11,861 £12,000 +3.5% 4,000 10,091 3,572
Slide 11: Key Performance Indicators: Contract
INTERIM RESULTS PRESENTATION 2012 RESULTS FOR SIX MONTHS ENDED 27 MAY 2012 KEY PERFORMANCE INDICATORS: CONTRACT Growth in Contract Runners Growth in Gross Profit Per Day Rate (£) 7,000 £100 +2.2% £90 88 87 88 86 6,000 5,745 83 +8.6% 79 £80 4,974 73 5,000 4,757 £70 4,494 4,381 3,952 £60 4,000 £50 3,0
Slide 12: Contract Runners – Comparison to Prior Years
INTERIM RESULTS PRESENTATION 2012 RESULTS FOR SIX MONTHS ENDED 27 MAY 2012 CONTRACT RUNNERS – COMPARISON TO PRIOR YEARS Indexed Contract Runners – H1 6 Year Analysis (Annual Trend based on P12 Nov Year End Runners) 109% 105% 104% 104% 101% 97% 95% 85% 77% 75% November December January February March
Slide 13: Permanent/Contract Analysis
INTERIM RESULTS PRESENTATION 2012 RESULTS FOR SIX MONTHS ENDED 27 MAY 2012 PERMANENT/CONTRACT ANALYSIS Gross Profit Growth In Permanent/Contract GP* H1 2012 £99.9m H1 2012 H1 2011 +32% 49% 51% Perm Contract +14% +13% H1 2011 £90.0m +10% 50% 50% Perm Contract Gross Margin H1 2012 H1 2011 Group (Blend
Slide 14: Gross Profit & Gross Margin
INTERIM RESULTS PRESENTATION 2012 RESULTS FOR SIX MONTHS ENDED 27 MAY 2012 GROSS PROFIT & GROSS MARGIN Gross Profit (£m) Gross Margin % £120 +12.2% +0.6% pts 102.5 24?? 35.9% 35.9% 99.9 101.0 £100 35.3% 93.3 90.0 34.7% 35% 34.3% 82.5 33.5% £80 33.3% 74.3 £60 30% £40 £20 £0 25% H1 2007 H1 2008 H1 200
Slide 15: Historical Operating Profit & Conversion Ratio
INTERIM RESULTS PRESENTATION 2012 RESULTS FOR SIX MONTHS ENDED 27 MAY 2012 HISTORICAL OPERATING PROFIT & CONVERSION RATIO Operating Profit (£m) Conversion Ratio (operating profit as a % of gross profit) £30.0 30.0% £25.0 24.4 25.6% 25.0% 23.8% 23.8% 22.9% 19.6 £20.0 20.0% 15.1 £15.0 15.0% 12.2% 11.8
Slide 16: Headcount
INTERIM RESULTS PRESENTATION 2012 RESULTS FOR SIX MONTHS ENDED 27 MAY 2012 HEADCOUNT Total Heads 2,274 1,647 1,506 1,597 1,675 1,777 1,863 2,019 2,272 2,269 Sales Heads* 1,684 1,206 1,087 1,148 1,208 1,279 1,308 1,460 1,714 1,676 714 Int’l Sales 1,111 Heads 1,129 892 645 764 778 UK Sales 650 700 Hea
Slide 17: Geographical & Sectoral Analysis
INTERIM RESULTS PRESENTATION 2012 RESULTS FOR SIX MONTHS ENDED 27 MAY 2012 GEOGRAPHICAL & SECTORAL ANALYSIS www.SThree.com | SThree plc 17
Slide 18: Geographic Analysis by Location of Client
INTERIM RESULTS PRESENTATION 2012 RESULTS FOR SIX MONTHS ENDED 27 MAY 2012 GEOGRAPHIC ANALYSIS BY LOCATION OF CLIENT Gross Profit Growth by Region* H1 2012 £99.9m 16% 34% H1 2012 H1 2011 UK&I 23% Benelux +49% France +42% Germany ROW +25% 8% 19% H1 2011 £90.0m +13% +11% 12% +2% 38% UK&I Europe ROW 22
Slide 19: Sector Analysis by Candidate Skillset
INTERIM RESULTS PRESENTATION 2012 RESULTS FOR SIX MONTHS ENDED 27 MAY 2012 SECTOR ANALYSIS BY CANDIDATE SKILLSET Gross Profit Growth In ICT/Non ICT GP* H1 2012 £99.9m ICT 4% H1 2012 H1 2011 11% Engineering & Energy 3% Banking +40% 5% Accountancy & Finance 56% Pharmaceuticals & 21% Biotechnology +24%
Slide 20: Business Breakdown by Client Industry Sector
INTERIM RESULTS PRESENTATION 2012 RESULTS FOR SIX MONTHS ENDED 27 MAY 2012 BUSINESS BREAKDOWN BY CLIENT INDUSTRY SECTOR H1 2012 H1 2011 Financial Other Financial Other Services 4% Services 7% ICT ICT 6% 5% 18% 19% Natural Natural Resources Resources 12% 9% Retail & Retail & Consumer Investment Consu
Slide 21: Business Mix – A Transformation
INTERIM RESULTS PRESENTATION 2012 RESULTS FOR SIX MONTHS ENDED 27 MAY 2012 BUSINESS MIX – A TRANSFORMATION 2008 2011 2012 7% 2% 16% 21% 9% 11% 68% 75% 91% Engineering & Energy Pharma & Biotech Other sectors Engineering & Energy and Pharmaceuticals & Biotechnology represented 9% of business in 2008,
Slide 22: Sales Headcount
INTERIM RESULTS PRESENTATION 2012 RESULTS FOR SIX MONTHS ENDED 27 MAY 2012 SALES HEADCOUNT FY 2008 H1 2012 33% 42% 58% 67% UK International Geographical mix of sales heads in recent years radically altered from 2008 prior peak www.SThree.com | SThree plc 22
Slide 23: Business Mix – Geographical & Sectoral
INTERIM RESULTS PRESENTATION 2012 RESULTS FOR SIX MONTHS ENDED 27 MAY 2012 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 & Accountanc
Slide 24: Indicative Future Office Rollout
INDICATIVE FUTURE OFFICE ROLLOUT Calgary Toronto Austin Denver Mexico City Buenos Aires Santiago EXISTING LOCATIONS USA United Kingdom Boston Aberdeen Leeds Chicago Birmingham London Houston Bristol Manchester New York Edinburgh Reading San Diego Glasgow San Francisco Ireland Brazil Dublin Sao Paulo
Slide 25: Financial Results
INTERIM RESULTS PRESENTATION 2012 RESULTS FOR SIX MONTHS ENDED 27 MAY 2012 FINANCIAL RESULTS www.SThree.com | SThree plc 25
Slide 26: Income Statement
INTERIM RESULTS PRESENTATION 2012 RESULTS FOR SIX MONTHS ENDED 27 MAY 2012 INCOME STATEMENT H1 2012 H1 2011 Actual LFL Growth* £m £m Growth Revenue 278.4 254.9 +9.2% +10.4% Gross Profit 99.9 90.0 +11.0% +12.2% Operating Profit 9.1 11.0 -16.7% -16.0% Net finance income 0.1 0.2 - - Profit before tax 9
Slide 27: Balance Sheet
INTERIM RESULTS PRESENTATION 2012 RESULTS FOR SIX MONTHS ENDED 27 MAY 2012 BALANCE SHEET Balance Sheet • SAP/Oracle/Microsoft upgrades 27 May 2012 29 May 2011 £m • Apollo integrator recruiter terminal Goodwill & intangibles 12.0 10.1 • Infrastructure investment (Good, Citrix) Property, plant & equip
Slide 28: Cash Flow
INTERIM RESULTS PRESENTATION 2012 RESULTS FOR SIX MONTHS ENDED 27 MAY 2012 CASH FLOW 2012 2011 £m £m Profit before tax 9.3 11.2 Depreciation and amortisation 3.6 3.2 Share awards charge & other non cash items 1.2 1.0 (Increase) in receivables (2.0) (5.1) (Decrease) in payables & provisions (3.6) (4.
Slide 29: Earnings Per Share
INTERIM RESULTS PRESENTATION 2012 RESULTS FOR SIX MONTHS ENDED 27 MAY 2012 EARNINGS PER SHARE 2012 2011 Change % Profit After Tax attributable to equity holders of the company £6.2m £7.4m -16.4% for basic EPS 119.6m 120.5m -0.8% Weighted average number of shares for fully diluted EPS 122.3m 123.3m -
Slide 30: Summary & 2012 Outlook
INTERIM RESULTS PRESENTATION 2012 RESULTS FOR SIX MONTHS ENDED 27 MAY 2012 SUMMARY & 2012 OUTLOOK • Demand in certain sectors such as Engineering & Energy and Pharmaceuticals & Biotechnology remains strong • In overall terms however, the market is becoming more challenging • Market conditions remain
Slide 31: Questions
INTERIM RESULTS PRESENTATION 2012 RESULTS FOR SIX MONTHS ENDED 27 MAY 2012 QUESTIONS Thank you for listening, please feel free to ask any questions www.SThree.com | SThree plc 31
Slide 32: Regional Trading Metrics
INTERIM RESULTS PRESENTATION 2012 RESULTS FOR SIX MONTHS ENDED 27 MAY 2012 REGIONAL TRADING METRICS www.SThree.com | SThree plc 32
Slide 33: UK&I Trading Metrics
INTERIM RESULTS PRESENTATION 2012 RESULTS FOR SIX MONTHS ENDED 27 MAY 2012 UK&I TRADING METRICS Runners At Period End GPDR - Constant Currency ICT/Non ICT Split YTD 2012** +2.7% 72.56 74.44 Non ICT 3,000 (2.1%) 80 2,396 37% 2,346 2,500 60 2,000 ICT 1,500 40 63% 1,000 20 500 Perm/Contract Split YTD 2
Slide 34: Benelux Trading Metrics
INTERIM RESULTS PRESENTATION 2012 RESULTS FOR SIX MONTHS ENDED 27 MAY 2012 BENELUX TRADING METRICS Runners At Period End GPDR - Constant Currency ICT/Non ICT Split YTD 2012** +11.4% (2.4%) 98.04 95.68 954 1,000 100 Non ICT 856 42% 800 80 ICT 600 60 58% 400 40 200 20 Perm/Contract Split YTD 2012** 0
Slide 35: Germany Trading Metrics
INTERIM RESULTS PRESENTATION 2012 RESULTS FOR SIX MONTHS ENDED 27 MAY 2012 GERMANY TRADING METRICS Runners At Period End GPDR - Constant Currency ICT/Non ICT Split YTD 2012** +19.6% (3.1%) 752 120 111.38 107.97 800 629 Non ICT 100 600 46% ICT 80 54% 400 60 40 200 20 Perm/Contract Split YTD 2012** 0
Slide 36: France Trading Metrics
INTERIM RESULTS PRESENTATION 2012 RESULTS FOR SIX MONTHS ENDED 27 MAY 2012 FRANCE TRADING METRICS GPDR - Constant Currency ICT/Non ICT Split YTD 2012* Runners At Period End (4.3%) Non ICT +3.0% 92.12 400 100 88.15 24% 330 340 80 300 60 200 40 ICT 76% 100 20 Perm/Contract Split YTD 2012* 0 0 Cont Per
Slide 37: RoW Trading Metrics
INTERIM RESULTS PRESENTATION 2012 RESULTS FOR SIX MONTHS ENDED 27 MAY 2012 ROW TRADING METRICS Runners At Period End GPDR - Constant Currency ICT/Non ICT Split YTD 2012** ICT +114.7% +5.4% 400 365 140 28% 116.09 120 110.14 100 80 200 170 Non ICT 60 72% 40 20 Perm/Contract Split YTD 2012** 0 0 Cont 2
Slide 38: Supplementary Material
INTERIM RESULTS PRESENTATION 2012 RESULTS FOR SIX MONTHS ENDED 27 MAY 2012 SUPPLEMENTARY MATERIAL www.SThree.com | SThree plc 38
Slide 39: PBT Growth Post Dot Com Crash 2003–8
INTERIM RESULTS PRESENTATION 2012 RESULTS FOR SIX MONTHS ENDED 27 MAY 2012 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) 2004 to 2008 29.5 30 20 17.3 10 6.1 0 2003 2004 2005 2006 2007 2008 Year www.SThree.com | SThree plc 39
Slide 40: Historical Gross Profit & Gross Margin
INTERIM RESULTS PRESENTATION 2012 RESULTS FOR SIX MONTHS ENDED 27 MAY 2012 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% 31.3% 30.8% 195.5 30% 200 182.7 171.2 166.4 50% 42% 40% 44% 46% 49% 51% 48% 42%
Slide 41: Candidate Salary Positioning
INTERIM RESULTS PRESENTATION 2012 RESULTS FOR SIX MONTHS ENDED 27 MAY 2012 CANDIDATE SALARY POSITIONING Permanent Salary Analysis H1 2012 FY 2011 £100k+ £100k+ £70-100k £0-30k £0-30k 3% £70-100k 3% 11% 10% 8% 9% £30-40k £50-70k 27% £30-40k £50-70k 24% 29% 25% £40-50k £40-50k 26% 25% £56k £55K Curren
Slide 42: Cost Base Analysis
INTERIM RESULTS PRESENTATION 2012 RESULTS FOR SIX MONTHS ENDED 27 MAY 2012 COST BASE ANALYSIS Cost Base Payroll Costs IT & Other Professional 4% Central Support 10% Costs 27% Advertising 2% Property 10% Sales Related Costs Payroll 73% 74% The Group operates a relatively low fixed salary and has a yo
Slide 43: SThree: Evolving the Multi Brand Model
INTERIM RESULTS PRESENTATION 2012 RESULTS FOR SIX MONTHS ENDED 27 MAY 2012 STHREE: EVOLVING THE MULTI BRAND MODEL Niche Specialisations • ICT 25% • Engineering & Energy • Banking 32% • Pharmaceuticals & 23% Biotechnology 20%* • Accountancy • Job board SThree has grown 100% organically through niche
Slide 44: Two Types of Specialist Staffing Market
INTERIM RESULTS PRESENTATION 2012 RESULTS FOR SIX MONTHS ENDED 27 MAY 2012 TWO TYPES OF SPECIALIST STAFFING MARKET – DEFINED BY CANDIDATE MOBILITY PHARMACEUTICALS BANKING OIL & GAS BANKING ICT ACCOUNTANCY PHARMACEUTICALS & FINANCE OIL & GAS/MINING LOCAL GLOBAL Global candidates provide an ability to
Slide 45: Profile of International Growth
INTERIM RESULTS PRESENTATION 2012 RESULTS FOR SIX MONTHS ENDED 27 MAY 2012 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 an exi
Slide 46: Sector Diversification Leads to Global Opportunities
INTERIM RESULTS PRESENTATION 2012 RESULTS FOR SIX MONTHS ENDED 27 MAY 2012 SECTOR DIVERSIFICATION LEADS TO GLOBAL OPPORTUNITIES SINGAPORE The Glasgow/Singapore Example IT SCOTLAND SCOTLAND SE ASIA SE ASIA SINGAPORE IT OIL & OIL & OIL & Based Glasgow GAS GAS GAS MIDDLE OFFICE Based Glasgow Virtual Of
Slide 47: Apollo Integrator
INTERIM RESULTS PRESENTATION 2012 RESULTS FOR SIX MONTHS ENDED 27 MAY 2012 APOLLO INTEGRATOR Our Business Intelligence Platform Integrating our systems with social networking and corporate data sources www.SThree.com | SThree plc 47
Slide 48: New Job: Churn Drives Growth
INTERIM RESULTS PRESENTATION 2012 RESULTS FOR SIX MONTHS ENDED 27 MAY 2012 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.SThree.com