Sthree Plc · LSE:STEM
Sthree — FY2016 Earnings Presentation
44 slides from Sthree's earnings presentation, Nov 30, 2016
Slide 1: Full Year Results Presentation 2016
FULLRESULTS FULL YEAR YEAR RESULS PRESENTATION 2016 PRESENTATION 2016 RESULTS FOR THE YEAR ENDED 30 NOVEMBER 2016 RESULTS FOR YEAR ENDED 30 NOVEMBER 2016
Slide 2: 2016 Overview
2016 Overview • Robust full year performance, in the face of mixed trading conditions • Adjusted profit before tax flat YoY at £40.8m, above the top end of the consensus range • GP up 2%* YoY (up 6%* excluding Energy) and up 10% on a reported basis • Foreign exchange increased reported operating pro
Slide 3: Financial Results
FINANCIAL RESULTS 3
Slide 4: Financial Highlights
FINANCIAL HIGHLIGHTS Adjusted As Reported Adjusted As Reported Adjusted As Reported Adjusted FY 2016 FY 2016 FY 2015 FY 2015 Actual Growth Actual Growth CC Growth* Revenue £959.9m £959.9m £848.8m £848.8m +13% +13% +6% Contract gross profit £173.3m £173.3m £151.0m £151.0m +15% +15% +8% Permanent gros
Slide 5: Balance Sheet
BALANCE SHEET 30 November 30 November 2016 2015 A robust balance sheet Intangible assets £11.6m £11.1m Foreign Exchange (FX) PPE, Deferred Tax Assets and Working Property, plant & equipment £7.1m £5.6m Capital increase due to a weakening of GBP increasing the value of balances in our Investments £0.
Slide 6: Cash Flow Bridge
CASH FLOW BRIDGE £3.0m £2.7m £0.6m (£0.7m) (£3.1m) (£4.7m) £5.7m (£6.8m) £41.3m (£7.2m) (£9.0m) (£18.0m) £10.0m £6.2m YE 2015 Net Adjusted OP Depn and Share Foreign Share Investments Working Adjusting Treasury Capex Taxes and Dividends YE 2016 Net Cash Amort Options & Exchange options Capital items
Slide 7: Earnings Per Share and Dividends
EARNINGS PER SHARE AND DIVIDENDS Adjusted As Reported Adjusted As Reported Adjusted As Reported FY 2016 FY 2016 FY 2015 FY 2015 Actual Growth Actual Growth Profit after tax £29.8m £27.2m £29.4m £26.4m +1% +3% Weighted For basic EPS 128.3m 128.3m 127.0m 127.0m +1% +1% average Dilutive impact of share
Slide 8: Foreign Exchange Impact
FOREIGN EXCHANGE IMPACT Year Ended Year Ended YoY Exchange 30 November 2016 30 November 2015 Rate Movement Average Closing Average Closing Average Closing EUR € 1.25 1.18 1.36 1.42 7.9% 16.9% USD $ 1.39 1.25 1.54 1.50 9.7% 16.8% Year Ended Year Ended 30 November 2016 30 November 2015 Gross Operating
Slide 9: Operating Review
OPERATING REVIEW 9
Slide 10: 2016 Priority
2016 PRIORITY Progress Strategic investment in • Record Contract Runners at year end Contract • Contract now 67% of GP (FY 2015: 64%) • Now represents 63% of sales headcount, our highest ever Drive recovery in Permanent • Successful focus on improving productivity, up 3%* YoY productivity • Restruct
Slide 11: Business Profile
BUSINESS PROFILE DIVISION GEOGRAPHICAL SECTOR DIVERSIFICATION DIVERSIFICATION DIVERSIFICATION 1% 6% 25% 21% 33% 20% 45% FY 2016 FY 2016 FY 2016 9% 67% 8% 49% 16% Cont UK&I 2% ICT C Europe 7% Banking & Finance Perm USA 19% Energy 36% 19% APAC & ME30% Engineering 41% FY 2015 FY 2015 9% FY 2015 64% 11%
Slide 12: Contract / Permanent Gross Profit Analysis
CONTRACT / PERMANENT GROSS PROFIT ANALYSIS DIVISION GEOGRAPHY SECTOR 8% 23% 27% 34% 33% 35% 40% 48% 33% 61% FY 2016 92% 77% 73% 67% 66% 67% 65% 60% 52% 39% UK&I C Europe USA APAC & ME ICT Banking & Energy Engineering Life Sciences Cont Finance Perm Cont Perm Cont Perm 27% 29% 26% 36% 39% 35% 42% 51%
Slide 13: Key Performance Indicators: Contract
KEY PERFORMANCE INDICATORS: CONTRACT 9,078 8,412 7,573 5,745 5,791 4,692 5,122 4,157 4,359 CONTRACT RUNNERS -28% +5% +8% +9% +13% +31% +11% +8% vs vs vs vs vs vs vs vs FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 Contract margin % FY 2016 19.9% FY 2015 19.8% G
Slide 14: Contract Runners – Comparison to Prior Years
CONTRACT RUNNERS – COMPARISON TO PRIOR YEARS 135% 131% 130% 125% 120% 115% 112% 111% 110% 109% 108% 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 2016 14
Slide 15: Key Performance Indicators: Permanent
KEY PERFORMANCE INDICATORS: PERMANENT 10,236 7,434 7,343 6,060 6,551 6,429 6,601 6,408 5,731 PERMANENT PLACEMENT -41% +8% +13% -1% -12% +3% -3% -11% Placement VOLUMES vs vs vs vs vs vs vs vs volumes FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 excluding Energy FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16
Slide 16: Region & Sector Review
REGION & SECTOR REVIEW 16
Slide 17: Geographical Gross Profit Analysis
GEOGRAPHICAL GROSS PROFIT ANALYSIS FY 2016 FY 2015 26% GROSS PROFIT UK&I 17% 18% GROWTH / Benelux 14% 12% 9% 10% (DECLINE) BY France 5% REGION* 0% Germany USA (6%) (8%) APAC & ME (15%) UK&I 6% 7% 25% Benelux 20% 30% 19% GEOGRAPHICAL France DIVERSIFICATION Germany 17% 27% USA 23% 16% 5% 5% APAC & ME
Slide 18: Gross Profit Performance by Region
GROSS PROFIT PERFORMANCE BY REGION GROSS PROFIT AVERAGE SALES HEADCOUNT YoY GROWTH FY 2016 YoY GROWTH CONT PERM TOTAL DIVISION MIX CONT PERM TOTAL Perm Cont Q3 16 -4% -23% -9% +1% -27% -10% 23% 77% UK&I Q4 16 -7% -26% -12% -5% -32% -15% FY 16 -3% -21% -8% +2% -21% -7% Q3 16 +16% +4% +12% Perm Cont +
Slide 19: Gross Profit Performance by Sector
GROSS PROFIT PERFORMANCE BY SECTOR GROSS PROFIT AVERAGE SALES HEADCOUNT YoY GROWTH FY 2016 YoY GROWTH CONT PERM TOTAL DIVISION MIX CONT PERM TOTAL Q3 16 +12% -4% +8% Perm Cont +8% -3% +4% 27% 73% ICT Q4 16 +9% -2% +6% +6% -11% - FY 16 +15% +4% +12% +14% +1% +9% Q3 16 -9% -22% -16% Perm Cont +15% -8%
Slide 20: Energy - Group
ENERGY - GROUP % of Group Gross Profit YoY Growth Contract Runners Cont Perm Total 8% Q3 16 -13% -87% -32% Q4 16 -9% -78% -24% 11% FY 16 -12% -80% -30% Average Sales Headcount YoY Growth 1,083 1,078 1,034 1,006 1,046 Cont Perm Total 966 920 964 Q3 16 -14% -88% -38% Q4 16 -12% -79% -29% Q1 Q2 Q3 Q4 Q
Slide 21: Outlook
OUTLOOK • Heightened level of political & economic uncertainty to remain a feature • Continued headcount investment in more resilient Contract market • 67% of Group GP (2012: 50%) • 63% of sales headcount (2012: 44%) • Contract runners +77% since 2012 • Continued focus on productivity in Permanent •
Slide 22: Financial Calendar
FINANCIAL CALENDAR 2017 17 March Q1 Interim Management Statement 20 April Annual General Meeting 09 June Final Dividend Paid 16 June Trading update for the six months ended 31 May 2017 24 July Interim results for the six months ended 31 May 2017 15 September Q3 Interim Management Statement 15 Decemb
Slide 23: Supplementary Material
SUPPLEMENTARY MATERIAL 23
Slide 24: UK&I Trading Metrics
UK&I TRADING METRICS GROSS PROFIT GROWTH YoY UK Q1 Q2 Q3 Q4 FY OFFICES Cont -1% - -4% -7% -3% NOV 16 10 25% of NOV 15 13 Irel and Group Perm +2% -31% -23% -26% -21% YoY -3 GP Total - -9% -9% -12% -8% DIVISION MIX SECTOR MIX FY 2016 SECTOR MIX FY 2015 2% 1% ICT 23% 10% Banking & Finance 10% 27% 10% E
Slide 25: UK&I Trading Metrics
UK&I TRADING METRICS PERIOD END CONTRACT PERMANENT SALES HEADCOUNT RUNNERS PLACEMENTS* 364 FY 16 2,663 FY 16 1,455 FY 16 166 530 FY 15 2,881 FY 15 1,918 Cont Perm Total Cont Perm Total YoY YoY YoY -8% -30% -16% -8% -24% AVERAGE CONTRACT PERMANENT SALES HEADCOUNT GROSS PROFIT PER DAY RATE PLACEMENT F
Slide 26: Benelux Trading Metrics
BENELUX TRADING METRICS 5% 1% Bel Lux GROSS PROFIT GROWTH YoY 11% Neth Q1 Q2 Q3 Q4 FY OFFICES Cont +17% +14% +5% +10% +11% NOV 16 6 17% of NOV 15 7 Group Perm +15% +16% -5% -12% +2% YoY -1 GP Total +16% +14% +3% +3% +9% DIVISION MIX SECTOR MIX FY 2016 SECTOR MIX FY 2015 ICT 26% 8% Banking & Finance
Slide 27: Benelux Trading Metrics
BENELUX TRADING METRICS PERIOD END CONTRACT PERMANENT SALES HEADCOUNT RUNNERS PLACEMENTS* 258 FY 16 1,970 FY 16 993 FY 16 116 FY 1,648 FY 15 1,009 374 15 Cont Perm Total Cont Perm Total YoY YoY YoY +8% -11% +1% +20% -2% AVERAGE CONTRACT PERMANENT SALES HEADCOUNT GROSS PROFIT PER DAY RATE PLACEMENT F
Slide 28: Germany Trading Metrics
GERMANY TRADING METRICS GROSS PROFIT GROWTH YoY Germany Q1 Q2 Q3 Q4 FY OFFICES Cont +20% +28% +24% +16% +22% NOV 16 8 27% of NOV 15 8 Group Switz Perm +31% +9% +7% +1% +11% YoY - GP Total +25% +20% +17% +10% +17% DIVISION MIX SECTOR MIX FY 2016 SECTOR MIX FY 2015 ICT Banking & Finance 23% 24% 40% Co
Slide 29: Germany Trading Metrics
GERMANY TRADING METRICS PERIOD END CONTRACT PERMANENT SALES HEADCOUNT RUNNERS PLACEMENTS* 311 FY 16 1,971 FY 16 1,746 FY 16 247 558 FY 15 1,657 FY 15 1,535 Cont Perm Total Cont Perm Total YoY YoY YoY +9% +1% +5% +19% +14% AVERAGE CONTRACT PERMANENT SALES HEADCOUNT GROSS PROFIT PER DAY RATE PLACEMENT
Slide 30: France Trading Metrics
FRANCE TRADING METRICS France GROSS PROFIT GROWTH YoY Q1 Q2 Q3 Q4 FY OFFICES Cont +8% +14% +16% +24% +16% NOV 16 1 5% of NOV 15 1 Group Perm +23% -23% +3% -9% -3% YoY - GP Total +12% +1% +12% +13% +10% DIVISION MIX SECTOR MIX FY 2016 SECTOR MIX FY 2015 ICT 28% 16% Banking & Finance 14% 32% Cont 7% E
Slide 31: France Trading Metrics
FRANCE TRADING METRICS PERIOD END CONTRACT PERMANENT SALES HEADCOUNT RUNNERS PLACEMENTS* 79 FY 16 631 FY 16 256 FY 16 35 114 FY 15 518 FY 15 239 Cont Perm Total Cont Perm Total YoY YoY YoY +29% -10% +14% +22% +7% AVERAGE CONTRACT PERMANENT SALES HEADCOUNT GROSS PROFIT PER DAY RATE PLACEMENT FEE* 67
Slide 32: USA Trading Metrics
USA TRADING METRICS GROSS PROFIT GROWTH YoY USA Q1 Q2 Q3 Q4 FY OFFICES Cont +20% +10% +5% +6% +10% NOV 16 8 20% of NOV 15 6 Group Perm +2% -15% -30% -7% -15% YoY 2 GP Total +14% - -10% +1% - DIVISION MIX SECTOR MIX FY 2016 SECTOR MIX FY 2015 ICT Banking & Finance 10% 15% 33% Cont Energy 39% 44% 49%
Slide 33: USA Trading Metrics
USA TRADING METRICS PERIOD END CONTRACT PERMANENT SALES HEADCOUNT RUNNERS PLACEMENTS* 210 FY 16 1,363 FY 16 680 FY 16 97 FY 307 15 1,297 FY 15 803 Cont Perm Total Cont Perm Total YoY YoY YoY -9% -30% -17% +5% -15% AVERAGE CONTRACT PERMANENT SALES HEADCOUNT GROSS PROFIT PER DAY RATE PLACEMENT FEE* 23
Slide 34: Asia Pacific & Middle East Trading Metrics
ASIA PACIFIC & MIDDLE EAST TRADING METRICS APAC & GROSS PROFIT GROWTH YoY ME Q1 Q2 Q3 Q4 FY OFFICES Cont +3% +3% -15% +4% -2% NOV 16 6 6% of NOV 15 6 Group Perm -21% -27% -32% -9% -23% YoY - GP Total -13% -18% -26% -4% -15% DIVISION MIX SECTOR MIX FY 2016 SECTOR MIX FY 2015 ICT 2% 2% 16% Banking & F
Slide 35: Asia Pacific & Middle East Trading Metrics
ASIA PACIFIC & MIDDLE EAST TRADING METRICS PERIOD END CONTRACT PERMANENT SALES HEADCOUNT RUNNERS PLACEMENTS* 59 FY 16 480 FY 16 601 FY 16 104 163 FY 15 411 FY 15 904 Cont Perm Total Cont Perm Total YoY YoY YoY +5% -16% -9% +17% -34% AVERAGE CONTRACT PERMANENT SALES HEADCOUNT GROSS PROFIT PER DAY RAT
Slide 36: Sector Gross Profit Analysis
SECTOR GROSS PROFIT ANALYSIS ICT BY REGION BANKING & FINANCE BY REGION 4% 6% 15% 3% 23% GROUP BY SECTOR 5% 33% 16% 29% 28% 40% 32% 29% 1% 31% 12% 14% 6% 18% 9% 5% 19% 6% 21% 6% 11% 2% 19% 41% 45% 9% 9% ENGINEERING BY REGION LIFE SCIENCES BY REGION 11% 8% 18% 2% 16% 5% 12% ICT 27% 5% 15% 5% 1% 5% 4%
Slide 37: Cash Flow
CASH FLOW Adjusted As Reported Adjusted As Reported FY 2016 FY 2016 FY 2015 FY 2015 Operating profit before exceptional items £41.3m £37.8m £41.5m £38.4m Depreciation, amortisation and impairments £5.7m £5.7m £5.1m £6.6m Share awards charge and other non cash items £3.0m £3.0m £4.2m £4.2m Receivable
Slide 38: Historical Gross Profit & Gross Margin
HISTORICAL GROSS PROFIT & GROSS MARGIN FY GP £213.6m £167.8m £162.4m £189.5m £199.5m £192.8m £218.2m £235.7m £258.7m £300m £250m £200m £138.9m GROSS £125.2m £150m £113.9m £117.4m £76.2m £102.2m £102.4m £101.2m PROFIT £89.8m £100m £50m £99.7m £91.6m £87.3m £97.1m £91.6m £100.8m £110.5m £119.8m £72.5m
Slide 39: Historical Operating Profit & Conversion Ratio
HISTORICAL OPERATING PROFIT & CONVERSION RATIO FY OP £56.8m £18.0m £21.2m £30.0m £25.1m £21.0m £29.8m £41.5m £41.3m £60m ADJUSTED £50m OPERATING £40m £32.4m PROFIT £30m £27.4m £26.0m before £20m £19.0m £21.4m exceptional £7.0m £16.0m £24.4m £14.1m £14.3m £10m £15.3m items £11.0m £7.1m £11.0m £9.1m £
Slide 40: 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 Nov 15 May 16 Nov 16 Period End 2,122 1,511 1,461 1,638 1,719 1,865 2,109 2,100 2,021 2,125 2,232 2,484 2,483 2,571 2,752 2,712 2,590 Total Heads Period End 1,578 1,111 1,051 1,181 1,204 1,351
Slide 41: Sales Headcount
SALES 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 Nov 15 May 16 Nov 16 Period End 1,578 1,111 1,051 1,181 1,204 1,351 1,610 1,620 1,568 1,667 1,797 2,015 2,016 2,051 2,185 2,142 2,044 Sales Heads 915 843 764 949 927 1,006 903 843 899 98
Slide 42: Cost Base Analysis
COST BASE ANALYSIS 1% 7% 6% 17% 7% Cost Payroll Base Costs 79% 83% Payroll Property Advertising IT & Professional Other Support Services Sales The Group has maintained its flexible cost base Note 1: Based on costs for FY 2016 42
Slide 43: Tracker Share (Minority Interest) Arrangements
TRACKER SHARE (MINORITY INTEREST) ARRANGEMENTS Low barriers to entry make it a challenge to retain senior Tracker shares – how they work staff – tracker shares < 22.5% mitigate this. Sold to < 22.5% Sold to SThree entrepreneurial staff at fair value The Tracker Share model 5 YEARS > 77.5% allows sel
Slide 44: 39 Offices in 15 Countries
39 OFFICES IN 15 COUNTRIES Antwerp Luxembourg City Brussels SS = 2 7 BELGIUM LUXEMBOURG NETHERLANDS FRANCE Amsterdam Paris Rotterdam 4 GERMANY SWITZERLAND , eo == Berlin Zurich Dosseldorf USA Frankfurt Munich Hamburg Stuttgart Austin Boston Chicago Houston Minneapolis New York San Diego San Francisc