Sthree Plc · LSE:STEM
Sthree — H1 2011 Earnings Presentation
48 slides from Sthree's earnings presentation, July 2011
Slide 1: Interim Results Presentation 2011
Interim Results Presentation 2011 Interim Results for the six months ended 29 May 2011
Slide 2: SThree Profiles
SThree Profiles Interim Results 2011 Interim Results for the six months ended 29 May 2011 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: Key Facts
Key Facts Interim Results 2011 Interim Results for the six months ended 29 May 2011 • Founded in 1986, floated in 2005 • 100% organic growth through multi brand model • Pure play specialist staffing – average perm salary £47k, contract pro rata £89k • 55 offices, 33 non UK, 63% of GP international •
Slide 4: Half Year 2011 Financial Highlights
Half Year 2011 Financial Highlights Interim Results 2011 Interim Results for the six months ended 29 May 2011 Actual LFL H1 2011 H1 2010 Growth Growth Revenue £254.9m £221.7m +15% +17% Gross Profit (fee income) £90.0m £74.3m +21% +23% Operating Profit £11.0m £7.1m +54% +56% Conversion Ratio* 12.2% 9
Slide 5: 2011 H1 Trading Update
2011 H1 Trading Update Interim Results 2011 Interim Results for the six months ended 29 May 2011 • All regions continuing to show improving performance, with accelerating year on year growth in the period • Permanent gross profit up 34%* year on year • Contract gross profit up 15%* year on year • Gr
Slide 6: UK Offices
22 UK Offices Interim Results 2011 Interim Results for the six months ended 29 May 2011 y 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 IT Job Board Real St
Slide 7: Non-UK Offices
33 Non-UK Offices Interim Results 2011 Interim Results for the six months ended 29 May 2011 New Offices opened in Existing office locations: 2010/2011: y Perth y Amsterdam y Frankfurt y New York ¾ Progressive (2010) ¾ Computer Futures (2000) ¾ Computer Futures (1999) ¾ Huxley (2006) / Real Progressi
Slide 8: Key Performance Indicators: Permanent
Key Performance Indicators: Permanent Interim Results 2011 Interim Results for the six months ended 29 May 2011 Growth in Permanent Placement Volume Growth in Permanent Average Fee 6,000 £14,000 +8.3% 12,672 12,851 11,838 11,861 5,008 £12,000 5,000 4,580 10,091 £10,000 +21.4% 9,116 4,000 3,450 3,302
Slide 9: Key Performance Indicators: Contract
Key Performance Indicators: Contract Interim Results 2011 Interim Results for the six months ended 29 May 2011 Growth in Contract Runners Growth in Gross Profit Per Day Rate 7,000 £100.00 +5.8% £90.00 £87.67 £88.10 £86.40 6,000 5,745 £83.24 £79.11 £80.00 £73.14 4,974 5,000 +10.9% £70.00 4,494 4,381
Slide 10: Gross Profit & Gross Margin
Gross Profit & Gross Margin Interim Results 2011 Interim Results for the six months ended 29 May 2011 Gross Profit (£m) Gross Margin % £120 40.0% +1.8% pts 35.3% 35.3% 102.5 34.3% 34.7% +23.3% 35.0% 33.5% 33.3% £100 93.3 90.0 91.6 30.0% 82.5 £80 74.3 25.0% £60 20.0% 15.0% £40 10.0% £20 5.0% £0 0.0%
Slide 11: Historical Operating Profit & Conversion Ratio
Historical Operating Profit & Conversion Ratio Interim Results 2011 Interim Results for the six months ended 29 May 2011 Operating Profit (£m) Conversion Ratio (Operating Profit as a % of Gross Profit) 30.0% £30.0 25.6% 24.4 25.0% 23.8% 23.8% £25.0 22.9% 19.6 20.0% £20.0 15.1 15.0% £15.0 +56.3% 12.2
Slide 12: Geographic Analysis By Location of Client
Geographic Analysis By Location of Client Interim Results 2011 Interim Results for the six months ended 29 May 2011 Gross Profit Growth by Region* 140% H1 2011 H1 2010 130% H1 2011 13% 120% 37% 100% 80% 22% UK 60% Benelux 43% France 40% 32% 7% Germany ROW 20% 21% 9% £90.0m 11% 0% H1 2010 -20% -20% 1
Slide 13: Permanent/Contract Analysis
Permanent/Contract Analysis Interim Results 2011 Interim Results for the six months ended 29 May 2011 Gross Profit Growth In Permanent/Contract GP* H1 2011 H1 2010 40% H1 2011 34% 30% 20% 15% 50% 50% 10% 0% Perm £90.0m Contract -10% -11% H1 2010 -20% -25% -30% 46% 54% Perm Contract Gross Margin H1 2
Slide 14: Sector Analysis By Candidate Skillset
Sector Analysis By Candidate Skillset Interim Results 2011 Interim Results for the six months ended 29 May 2011 Gross Profit Growth In ICT / Non ICT GP* H1 2011 8% 4% 50% H1 2011 H1 2010 42% 5% 40% 8% 30% 20% 13% 60% ICT 9% 10% 15% Engineering & Energy Banking & Finance Accountancy 0% Pharma £90.0m
Slide 15: Business Breakdown By Client Industry Sector
Business Breakdown By Client Industry Sector Interim Results 2011 Interim Results for the six months ended 29 May 2011 Retail & Consumer Retail & Consumer Goods Media, Leisure Goods Entertainment 4% 4% 4% & Leisure ICT ICT 19% 4% Public Sector Public Sector 19% 5% 6% Financial Services Investment Ba
Slide 16: Headcount
Headcount Interim Results 2011 Interim Results for the six months ended 29 May 2011 Total -28% Total -10% Total +6% Total +11% Total +17% Total +8% UK -42% UK -16% UK +5% UK +3% UK +10% UK +3% Int’l -10% Int’l -5% Int’l +6% Int’l +18% Int’l +25% Int’l +15% TOTAL HEADS 2,274 Vs. year end 2008 Vs. yea
Slide 17: Financial Results
Interim Results 2011 Interim Results for the six months ended 29 May 2011 Financial Results www.SThree.com SThree plc 17
Slide 18: Income Statement
Income Statement Interim Results 2011 Interim Results for the six months ended 29 May 2011 H1 2011 H1 2010 Actual LFL £m £m Growth Growth Revenue 254.9 221.7 +15.0% +16.8% Gross profit 90.0 74.3 +21.1% +23.1% Operating profit 11.0 7.1 +54.3% +56.3% Net finance income 0.2 0.2 - - Profit before tax 11
Slide 19: Balance Sheet
Balance Sheet Interim Results 2011 Interim Results for the six months ended 29 May 2011 Balance Sheet 29 May 30 May £'m 2011 2010 Goodwill & intangibles 10.1 10.0 £20m invoice discounting facility with RBS until April Property, plant & equipment 5.1 5.5 2012 • £20m committed • Base rate +175 bp Defe
Slide 20: Cash Flow
Cash Flow Interim Results 2011 Interim Results for the six months ended 29 May 2011 Cash Flow 2011 2010 £'m £'m Operating Profit 11.0 7.1 Depreciation and amortisation 3.2 3.0 Share awards charge, asset write offs, other non cash items 1.2 0.9 (Increase) / decrease in receivables (5.1) 6.7 (Decrease
Slide 21: Earnings Per Share
Earnings Per Share Interim Results 2011 Interim Results for the six months ended 29 May 2011 2011 2010 Change % Profit After Tax £7.4m £4.9m +53% Minority Interest - -£0.1m - Profit attributable to equity holders of the company £7.4m £4.8m +55% Weighted average number of shares for basic EPS 120.5m
Slide 22: Minority Interest Scheme
Minority Interest Scheme Interim Results 2011 Interim Results for the six months ended 29 May 2011 Background • c100 participants, across newer geographies and sectors, relating to 2006–2010 schemes • An opportunity to buy into a new business at an early stage, to become a part owner • A key retenti
Slide 23: Dividend Policy
Dividend Policy Interim Results 2011 Interim Results for the six months ended 29 May 2011 • A cash generative business throughout the economic cycle • A progressive ordinary dividend policy, targeting a medium term cover of 2.0 – 2.5x • Periodic review of the capital structure with the potential for
Slide 24: Summary & 2011 Outlook
Interim Results 2011 Interim Results for the six months ended 29 May 2011 Summary & 2011 Outlook www.SThree.com SThree plc 24
Slide 25: Contract Runners – H1 year comparison
Contract Runners – H1 5 year comparison Interim Results 2011 Interim Results for the six months ended 29 May 2011 Indexed Contract Runners - H1 5 Year Analysis (Annual Trend based on P12 Nov Year End Runners) 120% 109% 110% 104% 102% 100% 97% 90% 80% 77% 70% 60% 50% 40% November December January Feb
Slide 26: Business Mix – A Transformation
Business Mix – A Transformation Interim Results 2011 Interim Results for the six months ended 29 May 2011 H1 2011 H1 2010 H1 2009 22% 25% 32% 68% 75% 78% UK, ICT Gross Profit Other sectors and geographies Continued geographical & sector diversification derisks our business, longer established sector
Slide 27: Summary & 2011 Outlook
Summary & 2011 Outlook Interim Results 2011 Interim Results for the six months ended 29 May 2011 • A pleasing performance in H1, with the Group benefiting from improving conditions in most markets • Global Banking is less robust than 2010 and some softening in UK demand evident in recent weeks • Str
Slide 28: Growth Prospects
Interim Results 2011 Interim Results for the six months ended 29 May 2011 Growth Prospects www.SThree.com SThree plc 28
Slide 29: SThree: Evolving The Multi Brand Model
SThree: Evolving The Multi Brand Model Interim Results 2011 Interim Results for the six months ended 29 May 2011 Niche Specialisations ICT Banking 27% Engineering & Energy 27% Accountancy & Finance Pharma / Healthcare 23% Sales & Marketing 23% Brand % of 2010 Group GP SThree has grown 100% organical
Slide 30: Two Types Of Specialist Staffing Market – Defined By Candidate Mobility
Two Types Of Specialist Staffing Market – Defined By Candidate Mobility Interim Results 2011 Interim Results for the six months ended 29 May 2011 ncy n g oun ta n ki Ac c Ba nking Ba a s T . als G . & t i c I.C il a ceu Pha r m as O i c als & G eu t Oil c H . R . Ph arm a Local Global Global candida
Slide 31: Profile Of International Growth
Profile Of International Growth Interim Results 2011 Interim Results for the six months ended 29 May 2011 The Group’s expansion has four major dimensions: Increase headcount in an existing office into a newer sector e.g. Sydney Banking Increase headcount in an existing office in an established secto
Slide 32: Actual, Planned & Potential Office Openings
Actual, Planned & Potential Office Openings Interim Results 2011 2011/12 Interim Results for the six months ended 29 May 2011 Doha 3 Rio de Janeiro Antwerp 3 Melbourne Sao Paulo 3 Moscow Zurich Boston Mumbai Luxembourg Shanghai Chicago Toronto Oslo/Stavanger Opened/due to open Pending approval Subje
Slide 33: Business Mix
Business Mix Interim Results 2011 Interim Results for the six months ended 29 May 2011 Geographical Mix Geographical Mix Indicative Future Mix 2009 2010 (c. 5 years) 6% 11% 23% 30% 40% 45% 49% 49% 47% UK Europe ROW 2011 H1 ROW represents 13% of Group mix Source: SThree Internal Analysis www.SThree.c
Slide 34: Indicative Future Footprint
Indicative Future Footprint Interim Results 2011 Interim Results for the six months ended 29 May 2011 Americas UK & Ireland Europe Middle East & Africa AsiaPac New York Calgary London Düsseldorf Paris Dubai Hong Kong Shanghai San Francisco Toronto Manchester Hamburg Marseille Abu Dhabi Singapore Bei
Slide 35: Questions
Interim Results 2011 Interim Results for the six months ended 29 May 2011 Questions Thank you for listening, please feel free to ask any questions www.SThree.com SThree plc 35
Slide 36: Regional Trading Metrics
Interim Results 2011 Interim Results for the six months ended 29 May 2011 Regional Trading Metrics www.SThree.com SThree plc 36
Slide 37: UK Trading Metrics
UK Trading Metrics Interim Results 2011 Interim Results for the six months ended 29 May 2011 Runners at Period End GPDR - Constant Currency IT - Non IT Split 2011 Non ICT +5.1% +2.4% 39% 2,500 2,227 2,340 £80.00 £71.49 £73.20 £70.00 2,000 £60.00 1,500 £50.00 £40.00 IT 1,000 £30.00 61% £20.00 500 £10
Slide 38: Benelux Trading Metrics
Benelux Trading Metrics Interim Results 2011 Interim Results for the six months ended 29 May 2011 Runners at Period End GPDR - Constant Currency IT - Non IT Split 2011 Non ICT +0.5% 39% +4.3% 900 852 856 £120.00 £98.52 £102.77 800 £100.00 700 600 £80.00 500 IT £60.00 400 61% 300 £40.00 200 £20.00 10
Slide 39: Germany Trading Metrics
Germany Trading Metrics Interim Results 2011 Interim Results for the six months ended 29 May 2011 Runners at Period End GPDR - Constant Currency IT - Non IT Split 2011 +36.1% +6.5% Non ICT IT 700 629 £140.00 46% £116.51 54% 600 £120.00 £109.45 462 500 £100.00 400 £80.00 300 £60.00 200 £40.00 100 £20
Slide 40: France Trading Metrics
France Trading Metrics Interim Results 2011 Interim Results for the six months ended 29 May 2011 Runners at Period End GPDR - Constant Currency IT - Non IT Split 2011 Non NonICT ICT +13.0% 15% +16.5% 350 330 £120.00 292 £96.11 300 £100.00 £82.48 250 £80.00 200 £60.00 IT 150 £40.00 85% 100 50 £20.00
Slide 41: ROW Trading Metrics
ROW Trading Metrics Interim Results 2011 Interim Results for the six months ended 29 May 2011 Runners at Period End GPDR - Constant Currency IT - Non IT Split 2011 +89.9% IT +6.4% 52% 250 226 £120.00 £96.51 200 £100.00 £90.71 Non ICT £80.00 48% 150 119 £60.00 100 £40.00 50 £20.00 Perm - Cont Split 2
Slide 42: Supplementary Material
Interim Results 2011 Interim Results for the six months ended 29 May 2011 Supplementary Material www.SThree.com SThree plc 42
Slide 43: PBT Growth Post Dot Com Crash 2003 – 2008
PBT Growth Post Dot Com Crash 2003 – 2008 Interim Results 2011 Interim Results for the six months ended 29 May 2011 60 56.0 50.3 50 56% CAGR 40.3 2003 to 2008 40 34% CAGR PBT (£m) 29.5 30 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.SThree.c
Slide 44: Historical Gross Profit & Gross Margin
Historical Gross Profit & Gross Margin Interim Results 2011 Interim Results for the six months ended 29 May 2011 Gross Profit (£’m) Gross Margin (%) 250.0 218.9 200.0 40% 182.7 171.2 34.9% 35.1% 166.4 34.5% 34.7% 35% 34.0% 33.2% 33.0% 150.0 31.0% 30.8% 31.3% 135.5 123.0 30% 104.5 50% 42% 60% 40% 44%
Slide 45: Candidate Salary Positioning
Candidate Salary Positioning Interim Results 2011 Interim Results for the six months ended 29 May 2011 Permanent salary analysis H1 2011 FY 2010 100k + 100k + 70k - 100k 0k - 30k 70k - 100k 2% 0k - 30k 3% 8% 9% 14% 15% 33% 50k - 70k 50k - 70k 23% 23% 30k - 40k 27% 30k - 40k 29% 57% 40k - 50k 40k - 5
Slide 46: Sector Diversification Leads To Global Opportunities
Sector Diversification Leads To Global Opportunities Interim Results 2011 Interim Results for the six months ended 29 May 2011 The Glasgow/Singapore Example SINGAPORE IT SCOTLAND SCOTLAND SE ASIA SE ASIA SINGAPORE IT Oil & Gas Oil & Gas Oil & Gas Middle Office Virtual Office Banking Based Glasgow Ba
Slide 47: Performance Management Systems
Performance Management Systems Interim Results 2011 Interim Results for the six months ended 29 May 2011 Actual screenshot Permanent Consultant www.SThree.com SThree plc 47
Slide 48: “Churn” – A Key Multiplier Of Demand
“Churn” – A Key Multiplier Of Demand Interim Results 2011 Interim Results for the six months ended 29 May 2011 Vacancy filled Vacancy filled New Job Donor Business 3 Donor Business 1 3 1 has vacancy has vacancy 2 Vacancy filled Vacancy filled Donor Business 2 has vacancy Even when markets are mature