Sthree Plc · LSE:STEM
Sthree — FY2012 Earnings Presentation
53 slides from Sthree's earnings presentation, January 2013
Slide 1: Full Year Results Presentation 2012
FULL YEAR RESULTS PRESENTATION 2012 RESULTS FOR YEAR ENDED 25 NOVEMBER 2012
Slide 2: SThree Profiles
FULL YEAR RESULTS PRESENTATION 2012 RESULTS FOR THE YEAR ENDED 25 NOVEMBER 2012 STHREE PROFILES GARY ELDEN – CHIEF EXECUTIVE OFFICER Gary was appointed CEO on 1st Jan 2013, previously Deputy CEO. Gary joined Computer Futures in 1990, after starting his career in the finance and property sectors. He
Slide 3: Introduction & Overview
FULL YEAR RESULTS PRESENTATION 2012 RESULTS FOR THE YEAR ENDED 25 NOVEMBER 2012 INTRODUCTION & OVERVIEW www.sthree.com | SThree plc 3
Slide 4: Key Facts
FULL YEAR RESULTS PRESENTATION 2012 RESULTS FOR THE YEAR ENDED 25 NOVEMBER 2012 KEY FACTS • Founded in 1986, floated in 2005 • Pure play specialist staffing – average perm salary £56k, contract pro rata £91k • 64 offices, 42 non UK, 65% of GP international • A balanced contract and permanent busines
Slide 5: FY 2012: An Overview
FULL YEAR RESULTS PRESENTATION 2012 RESULTS FOR THE YEAR ENDED 25 NOVEMBER 2012 FY 2012: AN OVERVIEW • A satisfactory performance, against a deteriorating macro economic backdrop in many geographies and sectors • Contract up 11%* year on year • Permanent GP up 6%* year on year • Permanent fees and c
Slide 6: Key Management Appointments to support Strategy
FULL YEAR RESULTS PRESENTATION 2012 RESULTS FOR THE YEAR ENDED 25 NOVEMBER 2012 Key Management Appointments to support Strategy STEVE QUINN Chief Operating Officer Managing Director EMEA JON PALLING PLC Board Director ICT Sector Head June 2012 November 2012 JUSTIN HUGHES MIKE WALKER Managing Directo
Slide 7: FY 2012: Financial Highlights
FULL YEAR RESULTS PRESENTATION 2012 RESULTS FOR THE YEAR ENDED 25 NOVEMBER 2012 FY 2012: FINANCIAL HIGHLIGHTS Actual 2012 2011 LFL Growth Growth Revenue £577.5m £542.5m +6.5% +9.4% Gross Profit £205.3m £195.5m +5.0% +8.0% Operating Profit £25.1m £30.0m -16.3% -14.7% Conversion ratio 12.2% 15.3% -3.1
Slide 8: Historical Operating Profit & Conversion Ratio
FULL YEAR RESULTS PRESENTATION 2012 RESULTS FOR THE YEAR ENDED 25 NOVEMBER 2012 HISTORICAL OPERATING PROFIT & CONVERSION RATIO Operating Profit (£m) Conversion Ratio (operating profit as a % of gross profit) 35.0% 30.3% £60.0 56.8 30.0% 28.6% 28.2% 52.3 25.9% £50.0 25.0% 22.9% 22.0% 41.0 £40.0 20.0%
Slide 9: Key Performance Indicators: Permanent
FULL YEAR RESULTS PRESENTATION 2012 RESULTS FOR THE YEAR ENDED 25 NOVEMBER 2012 KEY PERFORMANCE INDICATORS: PERMANENT Growth in Permanent Placement Volume Growth in Permanent Average Fee (£) 12,000 £16,000 +6.4% 10,236 13,901 £14,000 13,509 10,000 9,568 13,061 11,930 12,123 -1.2% £12,000 8,000 7,685
Slide 10: Key Performance Indicators: Contract
FULL YEAR RESULTS PRESENTATION 2012 RESULTS FOR THE YEAR ENDED 25 NOVEMBER 2012 KEY PERFORMANCE INDICATORS: CONTRACT Growth in Contract Runners Growth in Gross Profit Per Day Rate (£) 7,000 +1.3% £100 6,000 5,745 +9.2% 88 5,662 £90 87 85 85 84 5,122 78 £80 5,000 4,719 4,692 71 4,359 £70 4,157 65 4,0
Slide 11: Contract Runners – Comparison to Prior Years
FULL YEAR RESULTS PRESENTATION 2012 RESULTS FOR THE YEAR ENDED 25 NOVEMBER 2012 CONTRACT RUNNERS – COMPARISON TO PRIOR YEARS Indexed Contract Runners – 6 Year Analysis (Annual Trend based on P12 Nov Year End Runners) 130% 120% 120% 109% 110% 108% 105% 100% 101% 95% 90% 80% 72% 70% 60% November Decem
Slide 12: Permanent/Contract Analysis
FULL YEAR RESULTS PRESENTATION 2012 RESULTS FOR THE YEAR ENDED 25 NOVEMBER 2012 PERMANENT/CONTRACT ANALYSIS Gross Profit Growth in Permanent/Contract GP* FY 2012 £205.3m FY 2012 FY 2011 +24% 50% 50% Perm +12% Contract +11% FY 2011 £195.5m +6% Perm Contract 48% 52% Gross Margin FY 2012 FY 2011 Group
Slide 13: Headcount
FULL YEAR RESULTS PRESENTATION 2012 RESULTS FOR THE YEAR ENDED 25 NOVEMBER 2012 HEADCOUNT Total 2,274 1,647 1,506 1,597 1,777 1,863 2,019 2,272 2,269 2,188 Heads Sales Heads* 1,684 1,206 1,087 1,148 1,279 1,308 1,460 1,714 1,676 1,616 714 1,111 1,129 Int’l Sales 892 1,123 Heads 778 645 764 614 650 U
Slide 14: Geographical & Sectoral Analysis
FULL YEAR RESULTS PRESENTATION 2012 RESULTS FOR THE YEAR ENDED 25 NOVEMBER 2012 GEOGRAPHICAL & SECTORAL ANALYSIS www.sthree.com | SThree plc 14
Slide 15: Geographic Analysis by Location of Client
FULL YEAR RESULTS PRESENTATION 2012 RESULTS FOR THE YEAR ENDED 25 NOVEMBER 2012 GEOGRAPHIC ANALYSIS BY LOCATION OF CLIENT Gross Profit Growth by Region* FY 2012 £205.3m 17% 35% FY 2012 FY 2011 UK&I Benelux +47% France 23% +35% Germany +22% ROW +7% 7% 18% +4% FY 2011 £195.5m - 13% UK&I Europe ROW 37%
Slide 16: Sector Analysis by Candidate Skillset
FULL YEAR RESULTS PRESENTATION 2012 RESULTS FOR THE YEAR ENDED 25 NOVEMBER 2012 SECTOR ANALYSIS BY CANDIDATE SKILLSET Gross Profit Growth in ICT/Non ICT GP* FY 2012 £205.3m 4% ICT FY 2011 FY 2012 11% 54% Energy & 3% Engineering 6% Banking +24% +23% Accountancy & Finance 22% Pharmaceuticals & +13% Bi
Slide 17: Business Breakdown by Client Industry Sector
FULL YEAR RESULTS PRESENTATION 2012 RESULTS FOR THE YEAR ENDED 25 NOVEMBER 2012 BUSINESS BREAKDOWN BY CLIENT INDUSTRY SECTOR FY 2012 FY 2011 Financial Other Financial Other Services 4% ICT Services 5% 6% ICT 18% 6% 19% Natural Natural Resources Resources 13% 10% Retail & Investment Consumer Retail &
Slide 18: Business Mix – A Transformation
FULL YEAR RESULTS PRESENTATION 2012 RESULTS FOR THE YEAR ENDED 25 NOVEMBER 2012 BUSINESS MIX – A TRANSFORMATION 2008 2011 2012 7% 2% 16% 22% 9% 11% 67% 75% 91% Energy & Engineering Pharma & Biotech Other sectors Energy & Engineering and Pharmaceuticals & Biotechnology represented 9% of business in 2
Slide 19: Energy & Engineering and Pharma & Biotech Office Locations
ENERGY & ENGINEERING AND PHARMA & BIOTECH OFFICE LOCATIONS Chicago @ Boston @ New York @ Houston @ San Francisco @ San Diego @ @ Dublin | Manchester @ @ Glasgow Birmingham @ @ Edinburgh Reading @ @@ London | Bristol @ @ Aberdeen Dusseldorf @ Frankfurt @ Hamburg @ Munich @@ Oslo @ Stuttgart @ Amsterd
Slide 20: Sales Headcount
FULL YEAR RESULTS PRESENTATION 2012 RESULTS FOR THE YEAR ENDED 25 NOVEMBER 2012 SALES HEADCOUNT FY 2008 FY 2012 31% 42% 58% 69% UK International Geographical mix of sales heads in recent years radically altered from 2008 prior peak www.sthree.com | SThree plc 20
Slide 21: Business Mix – Geographical & Sectoral
FULL YEAR RESULTS PRESENTATION 2012 RESULTS FOR THE YEAR ENDED 25 NOVEMBER 2012 BUSINESS MIX – GEOGRAPHICAL & SECTORAL 2008 2012 Indicative Future 4% 17% Mix 23% 30% 35% 41% 55% 48% 47% UK&I Europe ROW 2% 8% 7% 2% 14% 11% 6% 7% 7% 6% 49% 54% 22% 77% 28% ICT Energy & Engineering Banking Pharmaceutica
Slide 22: Financial Results
FULL YEAR RESULTS PRESENTATION 2012 RESULTS FOR THE YEAR ENDED 25 NOVEMBER 2012 FINANCIAL RESULTS www.sthree.com | SThree plc 22
Slide 23: Income Statement
FULL YEAR RESULTS PRESENTATION 2012 RESULTS FOR THE YEAR ENDED 25 NOVEMBER 2012 INCOME STATEMENT 2012 2011 Actual LFL Growth* £m £m Growth Revenue 577.5 542.5 +6.5% +9.4% Gross Profit 205.3 195.5 +5.0% +8.0% Operating Profit 25.1 30.0 -16.3% -14.7% Net finance income 0.2 0.3 - - Profit before tax 25
Slide 24: Balance Sheet
FULL YEAR RESULTS PRESENTATION 2012 RESULTS FOR THE YEAR ENDED 25 NOVEMBER 2012 BALANCE SHEET 25 Nov 27 Nov £m 2012 2011 • SAP/Oracle/Microsoft upgrades • Apollo integrator recruiter Goodwill & intangibles 14.3 8.5 terminal • Infrastructure investment (Good, Property, plant & equipment 5.9 5.3 Citri
Slide 25: Cash Flow
FULL YEAR RESULTS PRESENTATION 2012 RESULTS FOR THE YEAR ENDED 25 NOVEMBER 2012 CASH FLOW 2012 2011 £m £m Profit before tax 25.3 30.3 Depreciation and amortisation 6.8 7.7 Net finance income (0.2) (0.3) Share awards charge & other non cash items 1.6 2.5 (Increase) in receivables (5.3) (12.0) Increas
Slide 26: Earnings Per Share
FULL YEAR RESULTS PRESENTATION 2012 RESULTS FOR THE YEAR ENDED 25 NOVEMBER 2012 EARNINGS PER SHARE 2012 2011 Change % Profit After Tax attributable to equity holders of the company £16.8m £20.3m -17.0% for basic EPS 119.5m 120.6m -0.9% Weighted average number of shares for fully diluted EPS 133.8m 1
Slide 27: Summary & 2013 Outlook
FULL YEAR RESULTS PRESENTATION 2012 RESULTS FOR THE YEAR ENDED 25 NOVEMBER 2012 SUMMARY & 2013 OUTLOOK • Demand in certain sectors such as Energy & Engineering and Pharmaceuticals & Biotechnology remains strong • Overall, markets remain challenging but in far better shape than in 2009 trough • Balan
Slide 28: 2013 Financial Calendar
FULL YEAR RESULTS PRESENTATION 2012 RESULTS FOR THE YEAR ENDED 25 NOVEMBER 2012 2013 FINANCIAL CALENDAR 28 January 2013 Annual results for the 52 week year ended 25 November 2012 8 March 2013 Q1 Interim Management Statement 18 April 2013 Annual General Meeting 7 June 2013 Trading update for the six
Slide 29: Questions
FULL YEAR RESULTS PRESENTATION 2012 RESULTS FOR THE YEAR ENDED 25 NOVEMBER 2012 QUESTIONS Thank you for listening, please feel free to ask any questions www.sthree.com | SThree plc 29
Slide 30: Regional Trading Metrics
FULL YEAR RESULTS PRESENTATION 2012 RESULTS FOR THE YEAR ENDED 25 NOVEMBER 2012 REGIONAL TRADING METRICS www.sthree.com | SThree plc 30
Slide 31: UK&I Trading Metrics
FULL YEAR RESULTS PRESENTATION 2012 RESULTS FOR THE YEAR ENDED 25 NOVEMBER 2012 UK&I TRADING METRICS Runners at Period End GPDR - Constant Currency ICT/Non ICT Split YTD 2012** 5% +2.3% 7% +2.5% 80 72.21 73.85 3,000 2,393 2,452 2,500 22% 60 2,000 62% 1,500 40 4% 1,000 ICT Energy & Engineering Other
Slide 32: Benelux Trading Metrics
FULL YEAR RESULTS PRESENTATION 2012 RESULTS FOR THE YEAR ENDED 25 NOVEMBER 2012 BENELUX TRADING METRICS GPDR - Constant Currency ICT/Non ICT Split YTD 2012** Runners at Period End 18% +10.0% -3.9% 1,200 120 1,004 98.28 6% 94.43 1,000 913 100 80 15% 57% 800 600 60 4% 400 40 ICT Energy & Engineering O
Slide 33: Germany Trading Metrics
FULL YEAR RESULTS PRESENTATION 2012 RESULTS FOR THE YEAR ENDED 25 NOVEMBER 2012 GERMANY TRADING METRICS ICT/Non ICT Split YTD 2012** Runners at Period End GPDR - Constant Currency 6% +15.5% 140 -2.7% 21% 1,000 840 112.71 120 109.66 800 727 53% 100 600 80 15% 400 60 5% ICT Energy & Engineering Other
Slide 34: France Trading Metrics
FULL YEAR RESULTS PRESENTATION 2012 RESULTS FOR THE YEAR ENDED 25 NOVEMBER 2012 FRANCE TRADING METRICS ICT/Non ICT Split YTD 2012* Runners at Period End GPDR - Constant Currency 9% 8% 500 -7.2% 120 -1.1% 403 90.68 89.66 9% 374 100 400 74% 80 300 60 200 40 ICT Energy & Engineering Other Banking Pharm
Slide 35: ROW Trading Metrics
FULL YEAR RESULTS PRESENTATION 2012 RESULTS FOR THE YEAR ENDED 25 NOVEMBER 2012 ROW** TRADING METRICS GPDR - Constant Currency ICT/Non ICT Split YTD 2012* Runners at Period End 1% +76.6% +0.4% 15% 500 452 140 28% 112.07 112.48 120 100 256 80 250 43% 13% 60 40 ICT Energy & Engineering Other Banking P
Slide 36: USA Trading Metrics
FULL YEAR RESULTS PRESENTATION 2012 RESULTS FOR THE YEAR ENDED 25 NOVEMBER 2012 USA TRADING METRICS ICT/Non ICT Split YTD 2012* Runners at Period End GPDR - Constant Currency +88.1% -9.3% 140 28% 500 452 124.13 33% 112.56 120 100 256 80 12% 250 60 27% 40 ICT Energy & Engineering Other Banking Pharma
Slide 37: Supplementary Material
FULL YEAR RESULTS PRESENTATION 2012 RESULTS FOR THE YEAR ENDED 25 NOVEMBER 2012 SUPPLEMENTARY MATERIAL www.sthree.com | SThree plc 37
Slide 38: 22 UK Offices
FULL YEAR RESULTS PRESENTATION 2012 RESULTS FOR THE YEAR ENDED 25 NOVEMBER 2012 22 UK OFFICES • London • Birmingham - SThree HQ - Computer Futures - SThree Group Training - Progressive - SThree Group Finance - Huxley - SThree Group IS/Group HR - Real Staffing Group - Computer Futures - Real Staffing
Slide 39: 25 European Offices
FULL YEAR RESULTS PRESENTATION 2012 RESULTS FOR THE YEAR ENDED 25 NOVEMBER 2012 Existing Offices France Switzerland y Paris y Zurich - Computer Futures (2003) - Huxley/Real (2011) - Progressive (2006)/Real Staffing Group (2009)/SThree L&D (2010) - Huxley (2008) Belgium y Marseille y Antwerp - Comput
Slide 40: 17 ROW Offices
FULL YEAR RESULTS PRESENTATION 2012 RESULTS FOR THE YEAR ENDED 25 NOVEMBER 2012 India y Mumbai - Huxley (2011) GCC y Dubai - Huxley (2008) y Doha - Huxley (2011) Russia y Moscow - Progressive/Huxley (2011) Americas Existing Offices y Boston - Huxley/ Real (2011) Australia y Chicago Perth 17 ROW Offi
Slide 41: PBT Growth Post Dot Com Crash 2003–2008
FULL YEAR RESULTS PRESENTATION 2012 RESULTS FOR THE YEAR ENDED 25 NOVEMBER 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 41
Slide 42: Historical Gross Profit & Gross Margin
FULL YEAR RESULTS PRESENTATION 2012 RESULTS FOR THE YEAR ENDED 25 NOVEMBER 2012 HISTORICAL GROSS PROFIT & GROSS MARGIN Gross Profit (£m) Gross Margin (%) 40% 36.0% 34.9% 34.7% 35.1% 35.6% 34.0% 34.5% 250 35% 33.2% 33.0% 31.0% 31.3% 218.9 30.8% 205.3 30% 195.5 200 182.7 171.2 44% 46% 49% 51% 48% 42%
Slide 43: Candidate Salary Positioning
FULL YEAR RESULTS PRESENTATION 2012 RESULTS FOR THE YEAR ENDED 25 NOVEMBER 2012 CANDIDATE SALARY POSITIONING Permanent Salary Analysis FY 2012 FY 2011 £100k+ £100k+ £0-30k £0-30k 5% £70-100k 3% £70-100k 10% 11% 8% 11% £30-40k £50-70k 27% £30-40k 24% 29% £50-70k 23% £40-50k 24% £40-50k 25% £56k £55K
Slide 44: Cost Base Analysis
FULL YEAR RESULTS PRESENTATION 2012 RESULTS FOR THE YEAR ENDED 25 NOVEMBER 2012 COST BASE ANALYSIS Cost Base Payroll Costs Central Other Support 9% Costs IT & 21% Professional 9% Advertising 2% Property 9% Payroll 71% Sales Related Costs 79% The Group operates a relatively low fixed salary and has a
Slide 45: Euro & USD/GBP Exchange Rate
FULL YEAR RESULTS PRESENTATION 2012 RESULTS FOR THE YEAR ENDED 25 NOVEMBER 2012 EURO & USD/GBP EXCHANGE RATE Year Ended 25th November 2012 Year Ended 27th November 2011 Average Closing Average Closing EUR € 1.2218 1.2355 1.1497 1.1659 USD $ 1.5775 1.6026 1.6007 1.5434 Impact of one percent change pe
Slide 46: Tracker Shares (Minority Interest) Arrangements
FULL YEAR RESULTS PRESENTATION 2012 RESULTS FOR THE YEAR ENDED 25 NOVEMBER 2012 TRACKER SHARES (MINORITY INTEREST) ARRANGEMENTS Background • Circa100 participants, across newer geographies and sectors • An opportunity to buy into a new business at an early stage, to become a part owner • A key reten
Slide 47: SThree: Evolving the Multi Brand Model
FULL YEAR RESULTS PRESENTATION 2012 RESULTS FOR THE YEAR ENDED 25 NOVEMBER 2012 STHREE: EVOLVING THE MULTI BRAND MODEL Niche Specialisations • ICT 25% • Energy & Engineering 33% • Banking 24% • Pharmaceuticals & Biotechnology 18% • Accountancy • Job board SThree has grown 100% organically through ni
Slide 48: Two Types of Specialist Staffing Market
FULL YEAR RESULTS PRESENTATION 2012 RESULTS FOR THE YEAR ENDED 25 NOVEMBER 2012 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 49: Profile of International Growth
FULL YEAR RESULTS PRESENTATION 2012 RESULTS FOR THE YEAR ENDED 25 NOVEMBER 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 a
Slide 50: Sector Diversification Leads to Global Opportunities
FULL YEAR RESULTS PRESENTATION 2012 RESULTS FOR THE YEAR ENDED 25 NOVEMBER 2012 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 51: Current Locations
CURRENT LOCATIONS USA United Kingdom Germany France Belgium GCC India Boston Aberdeen Leeds Dusseldorf Marseille Antwerp Doha Mumbai Chicago Birmingham London Frankfurt Paris Brussels Dubai Houston Hong Kong Bristol Manchester Hamburg Luxembourg Russia Australia New York Edinburgh Reading Munich Sin
Slide 52: Apollo Integrator
FULL YEAR RESULTS PRESENTATION 2012 RESULTS FOR THE YEAR ENDED 25 NOVEMBER 2012 APOLLO INTEGRATOR Our Business Intelligence Platform Integrating our systems with social networking and corporate data sources www.sthree.com | SThree plc 52
Slide 53: Even when markets are mature, churn drives growth
FULL YEAR RESULTS PRESENTATION 2012 RESULTS FOR THE YEAR ENDED 25 NOVEMBER 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.sthre