SThree Investor Day 23rd March 2010 Investor Day 2010 Day Investor
www.SThree.com SThree plc 1 Agenda
• Introduction & Overview Russell Clements
Investor Day 2010 Day Investor • Key Risks & Mitigation Alex Smith
• Market Selection Criteria Justin Hughes
• Case Study – Germany Nye Bidwell
• Case Study – Singapore/Oil & Gas Stuart Clark
• IT As A Strategic Differentiator David Timoney
• Apollo/MIS Walkthrough Andy Hallett
www.SThree.com SThree plc 2 Globalising The Business Introduction & Overview Russell Clements - CEO Investor Day 2010 Day Investor
www.SThree.com SThree plc 3 The SThree Strategy
Further international
Investor Day 2010 Day Investor t ec expansion sp Co re nt t & inu or e pp the , ra ard rew Development of Commitment to y, erg new staffing the UK business en of M sectors es ult alu i-b r v ran ou d a ith pp w Drive operational roa line ch In efficiencies / improve productivity
www.SThree.com SThree plc 4 Global Expansion – The Story So Far
• International expansion began 1998 in Brussels • 27 overseas offices – 21 Europe and 6 ROW • 2009 55% gross profit generated outside of the UK Investor Day 2010 Day Investor • At Q1 2010 circa 700 sales staff overseas (58% of total) with 100 overseas sales vacancies approved • Non UK GP split currently 55% Permanent and 45% Contract • Largest overseas market is Benelux, followed by Germany • Two further international offices confirmed for start H2 2010 – San Francisco and Delhi
www.SThree.com SThree plc 5 Methodology – The Criteria Used To Target Locations
Availability of Medium term Economic size* Economic growth* GDP per capita* niche markets ** attractiveness
Measure GDP Measure GDP growth Measure GDP per capita Measure number of Measure SThree niche A qualitative review by Units US$ billions Units percent Units US$ sectors Senior management based on market
Investor Day 2010 Day Investor Units number maturity, peers presence, cultural/legislative barriers and Scale Scale Scale Scale accessibility
Highly > 10,000 > 6 > 60,000 N/A attractive
> 1,000 > 4 > 40,000 3 Attractive
Case by case > 500 > 2 > 20,000 2 review
> 100 > 1 > 10,000 1 Limited attractiveness
< 100 < 1 < 10,000 0 Unattractive
* IMF World economic outlook data used ** SThree niche markets are; ICT,HR, Banking, Oil & Gas, Pharma/Life Sciences, Accountancy, Public Sector and Engineering Source: IMF, Competitor websites, internal analysis
www.SThree.com SThree plc 6 SThree – A Transformed Business
2009 2008 2007 Investor Day 2010 Day Investor 31%
41% 47% 53% 59%
69%
UK, ICT Gross Profit Other
Geographical & sector diversification has radically reshaped the SThree business over a relatively short timeframe
Source: SThree Accounts
www.SThree.com SThree plc 7 Commitment To International Expansion, Even In Challenging Conditions
Hamburg (FS Group) Marseille (FS Group)
Dusseldorf (Progressive/ Singapore (Progressive) Investor Day 2010 Day Investor Huxley)
Frankfurt (Real/ Progressive)
Stuttgart (FSGroup)
2009 office openings
www.SThree.com SThree plc 8 2010 Actual & Planned Office Openings
Perth (Progressive) Qatar (Pathway)
Investor Day 2010 Day Investor Munich (FS Group) Antwerp (FS Group)
Dusseldorf (Prog / Huxley) Melbourne (Progressive)
San Francisco Houston (Progressive) (Real Resourcing) Zurich (Huxley / Progressive) Delhi (Huxley)
Key
Opened
Agreed/ready to open
Business Case approved in principle
www.SThree.com SThree plc 9 Globalising The Business – Indicative Future Profile
2009 Indicative Future Profile
6%
23% Investor Day 2010 Day Investor 30%
45%
49%
47%
UK Europe ROW
The significance of non-UK/non-European markets is expected to increase
Source: SThree Internal Analysis
www.SThree.com SThree plc 10 Changing The Shape Of The Business – UK & Europe
2009 Indicative Future Profile
Netherlands UK & Ireland UK & Ireland 17% Russia & Eastern Europe 47% 34% 2% Investor Day 2010 Day Investor
Others 2%
Netherlands Belgium 11% 8%
Belgium France 8% 8%
France 10% Others – includes Germany Germany Switzerland, Norway, 33% 20% Austria, Spain, Italy & Luxembourg
The single most noteworthy change is the increasing significance of Germany
www.SThree.com SThree plc 11 Changing The Shape Of The Business – ROW
2009 Indicative Future Profile
M iddle East & A frica M iddle East 18% Far East
Investor Day 2010 Day Investor 22% 23% Far East 31%
South A merica 2%
India 6%
North A merica North America 28% A ustralia 34% A ustralia 17% 19%
The significance of the Americas is expected to grow
www.SThree.com SThree plc 12 Indicative Future Footprint Investor Day 2010 Day Investor
Americas UK & Ireland Europe Middle East AsiaPac
New York Boston London Düsseldorf Marseille Dubai Hong Kong Shanghai San Francisco Atlanta Manchester Hamburg Antwerp Abu Dhabi Singapore Tokyo Washington Calgary Birmingham Frankfurt Luxembourg Bahrain Sydney Osaka Houston Toronto Leeds Munich Madrid Qatar Perth Delhi Dallas Vancouver Reading Paris Milan Saudi Arabia Melbourne Mumbai Chicago Rio/Sao Paulo Bristol Amsterdam Stevanger Cape Town Brisbane Kuala Lumpur Los Angeles Edinburgh Rotterdam Vienna Glasgow Brussels Zurich Aberdeen Berlin Moscow Dublin Cologne Prague Stuttgart Warsaw
www.SThree.com SThree plc 13 Globalising The Business - Summary
• Our default assumption is for our growth to be entirely organic • We are not opposed to considering bolt-on acquisitions in certain geographies Investor Day 2010 Day Investor • Cash is not a limiting factor but earnings dilution must be a consideration • Developing and maximising management bandwidth is the critical factor • Geographical expansion must be pursued on an “as well as” not “instead of” basis
www.SThree.com SThree plc 14 Globalising The Business – Summary
• Opportunities exist in both mature and immature staffing markets
Investor Day 2010 Day Investor • Greater sectoral diversity creates geographical opportunities and vice versa • Globalising the business drives increasing complexity • Development of world class support/planning functions is a prerequisite
www.SThree.com SThree plc 15 Globalising the Business Key Risks & Their Mitigation Alex Smith - CFO Investor Day 2010 Day Investor
www.SThree.com SThree plc 16 Key Risks To The Globalisation Strategy
• New venture selection • New venture execution
Investor Day 2010 Day Investor • The complexity of supporting a globalising business
www.SThree.com SThree plc 17 The Strategic Planning & Implementation Cycle
Strategic planning Investor Day 2010 Day Investor
Research and planning Evaluation of new ventures
Implementation
www.SThree.com SThree plc 18 Strategic Planning Understanding Our Mix Of Ventures
Ventures are grouped under the following categories of operational risk
Investor Day 2010 Day Investor Complex ventures operationally; will definitely require external resources Ventures in virgin territory; in some cases external resources may aide us I n Ventures where SThree has some experience in the country, but the c r venture incurs a higher operational risk than Amber ventures; e.g.complex e regulation, a European country which we have extensively tested but have a no physical presence s i n Ventures where SThree has a presence in the country but not in the city g Ventures where SThree already has a presence in the city r i Virtual office; testing a new market remotely s k A brand expanding into a new sector from an existing office Additional headcount within existing offices
www.SThree.com SThree plc 19 What We Did In 2009 & Plan To Do In 2010
Qatar (RSG/Progressive) Singapore (Progressive) Delhi (Huxley)
Investor Day 2010 Day Investor Zurich (Progressive/Huxley) San Francisco (RSG) Houston (Progressive)
Stuttgart (FSG) Perth (Progressive) Marseille (FSG) Antwerp (FSG)
Dusseldorf (Huxley/Prog) Munich (FSG) Dusseldorf (FSG) Frankfurt (Progressive) Increasing Risk Increasing Hamburg (FSG) Sydney (Progressive/FSG) Frankfurt (RSG) New York (RSG)
Rotterdam (FSG) London (RSG) Paris (Progressive) 2009 2010
www.SThree.com SThree plc 20 Research & Planning Of New Ventures
• Stage One: Scoping of business opportunity - Business justification of venture (strategic alignment / opportunistic)
Investor Day 2010 Day Investor - Preliminary investigation by the Strategic Implementation Group
• Stage Two: Research and preparation of business plan - Primary and secondary research - Market entry strategy - Financial projections - Impact on donor businesses
• Stage Three: Sign- off of business plan - Sign off by the Investment Committee (CEO, CFO, CDO & COO)
www.SThree.com SThree plc 21 Implementation
• Implementation is with the Strategic Implementation Group (“SIG”)
Investor Day 2010 Day Investor • Close working between front office and SIG to agree implementation plan
• Regular meetings until project go-live and project sign-off
• In most cases de-risk investment by running virtually
• Post Implementation Review for SIG after each go-live
• Commercial Post Implementation Reviews after 6, 12 & 18 months
www.SThree.com SThree plc 22 Implementation
• Strategic Implementation Group made up of representatives from: – Business Services – Legal – HR – IT – Administration & Property – Finance
Investor Day 2010 Day Investor – Company Secretarial – Tax & Treasury
• SIG Workflow consists of: – Legal Entity set-up – Trading Style set-up – Marketing & Data Acquisition plan – HR set-up – Compliance Review – Tax & Treasury set-up – Internal SAP set-up – Physical Office set-up
www.SThree.com SThree plc 23 Evaluation
Post implementation reviews - After each go live - Commercial reviews after 6, 12 & 18 months then BAU Investor Day 2010 Day Investor Strategic Planning - Iterative annual cycle - Impact on the strategy of emerging market trends - Factbased approach to drive insights - Where do we make £? - How does a venture’s financial performance compare with others in the same risk category? - What were some of the key issues and how can we mitigate them in the future? - What new opportunities have been discovered by this business and should be considered strategically? – Drives development plan and broader operating plan
www.SThree.com SThree plc 24 Strategic Assets For Growth
Global back office Global front office platform platform Investor Day 2010 Day Investor (SAP) (Siebel CRM)
Support Services
Global Global scalable processes infrastructure
Leverage these investments to support globalisation
www.SThree.com SThree plc 25 Support Services Transformation
Magellan • A programme to complement our growth strategy, sponsored by the Board
Investor Day 2010 Day Investor • A structured assessment conducted with the Hackett Group • Leverage strategic assets to further differentiate ourselves from competition
• Move towards an operating model that meets rapidly changing business needs, with stronger change management capabilities • Balances global support with time zone coverage and local presence • Will deliver effective and efficient support to the business
www.SThree.com SThree plc 26 Conclusion
New venture selection process New venture execution process EFFECTIVE
Investor Day 2010 Day Investor }
SThree has key strategic assets to enable growth already in place. These will be fully leveraged through Project Magellan.
www.SThree.com SThree plc 27 Market Selection Criteria Justin Hughes – March 2010 Investor Day 2010 Day Investor
www.SThree.com SThree plc 28 Agenda
• My SThree Profile • The Senior Management Repositioning
Investor Day 2010 Day Investor • Methodology – Criteria For Target Locations • Germany & Asia Pacific – Key Drivers of Growth • Leadership Selection For New Projects
www.SThree.com SThree plc 29 SThree Profile – Justin Hughes
1969 Born Cardiff 1990 Graduated BA Hons Economics Investor Day 2010 Day Investor 1995 Trainee Consultant Progressive London 1996 Consultant Progressive London 1997 Manager Progressive London 1999 Regional Sales Director Progressive Contract 2000 Sales Director Progressive Contract 2006 Managing Director Progressive 2010 Group Managing Director SThree
www.SThree.com SThree plc 30 Globalising The Business – Evolving The Senior Management Structure Investor Day 2010 Day Investor
www.SThree.com SThree plc 31 Repositioning Of The Group Managing Director Roles
• More appropriate to a globalising business • Allows the strengths of the brand model to continue
Investor Day 2010 Day Investor – Front office inter brand competition – Multiple routes to market – Brand sector specialisation • Allows us to marry the above with operational and strategic synergy • More efficient • More specialist • Frees up the movement of resources
www.SThree.com SThree plc 32 Methodology – The Criteria Used To Target Locations
Availability of Medium term Economic size* Economic growth* GDP per capita* niche markets ** attractiveness
Measure GDP Measure GDP growth Measure GDP per capita Measure number of Measure SThree niche A qualitative review by Units US$ billions Units percent Units US$ sectors Senior management based on market
Investor Day 2010 Day Investor Units number maturity, peers presence, cultural/legislative barriers and Scale Scale Scale Scale accessibility
Highly > 10,000 > 6 > 60,000 N/A attractive
> 1,000 > 4 > 40,000 3 Attractive
Case by case > 500 > 2 > 20,000 2 review
> 100 > 1 > 10,000 1 Limited attractiveness
< 100 < 1 < 10,000 0 Unattractive
* IMF World economic outlook data used ** SThree niche markets are; ICT,HR, Banking, Oil & Gas, Pharma/Life Sciences, Accountancy, Public Sector and Engineering Source: IMF, Competitor websites, internal analysis
www.SThree.com SThree plc 33 Two Types Of Market – Defined By Candidate Mobility
Global Driver For Candidate Demand Key Locations Or Regions Candidate Sectors
• Industry is highly specialised and experienced technical skill is in New York, Chicago, London, Edinburgh, Banking relative short supply. Paris, Frankfurt, Singapore, Hong Kong, • Candidates can operate anywhere in the world with their specific Tokyo niche skills Calgary, Houston, Dallas, Alaska, Aberdeen,
Investor Day 2010 Day Investor • Industry is highly specialised and experienced technical skill is in Stavanger, Angola, Nigeria, Caspian sea, relative short supply due to cutbacks in the industry prior to the Saudi Arabia, Qatar, UAE, Malaysia, Oil & Gas current boom Indonesia, Sinagpore, Perth • So candidates are either entry level or highly experienced East Coast USA, West Coast USA, UK, • Industry is relatively specialised and experienced. Germany, France, Switzerland, Singapore, Pharma • More established markets such as US, the demand for candidates Japan, (more emerging regions: China and are local Eastern Europe) Local Candidate Sectors
IT • Common global industry with common skill sets that we Any reasonable sized modern economy will understand. offer IT market • Candidates are likely to be local with only occasional niche market. Any reasonable sized modern economy will Accountancy • Candidates are all likely to be local. offer accountancy market
Any reasonable sized modern economy with strong manufacturing base Engineering • Candidates are all likely to be local. Most likely in advanced economies with HR • Candidates are all likely to be local. Anglo Saxon organisation structures or target clients will be global multinationals
www.SThree.com SThree plc 34 Leadership Selection
• Identify managers with high potential – Track record of performance
Investor Day 2010 Day Investor – Evidence of competencies – Values • Development experience – Contract and Permanent – Diverse sectors – Working in conjunction with the business infrastructure – Multiple regions – Multiple brands
www.SThree.com SThree plc 35 Germany – A Case Study Nye Bidwell – March 2010 Investor Day 2010 Day Investor
www.SThree.com SThree plc 36 Agenda
• SThree Profile – Nye Bidwell
Investor Day 2010 Day Investor • The German Market
• Maximising the Opportunity
• Summary
www.SThree.com SThree plc 37 SThree Profile – Nye Bidwell
1976 Born Arbroath, NE Scotland 1999 Graduated European Studies and French 1999 Consultant & TL Progressive International Contract - Investor Day 2010 Day Investor London 2001 Manager Progressive Germany Permanent - London 2004 Manager Progressive Germany Permanent - Munich 2007 Director Progressive Germany 2010 Director Huxley Associates and Progressive, Germany
www.SThree.com SThree plc 38 Investor Day 2010 Day Investor The German Market
www.SThree.com SThree plc 39 Germany – The Ideal Market?
• Largest population in Europe (82m) • 4th largest economy in the world Investor Day 2010 Day Investor • Underdeveloped staffing market • Well educated technically orientated workforce (c. 35% scientists/technicians) • Stable business environment (lowest DSOs) • Positive cultural/behaviourial trends • Large SME market (“Mittelstand”) • SThree well established, mature local management
Figures consistent with Q4 IMS 04.12.09
www.SThree.com SThree plc 40 It Has Taken Longer Than Some Expected, But the German Market Has Now Reached Critical Mass
f ss o ene war s te a ase ida cre M and n in o C ptio re cy o c gen an
Investor Day 2010 Day Investor a d w id ith at a es g r en eg c is ie te s r
Greater number of candidates placed through agencies
Clients have increasing need to engage with agencies to Agencies have access to access candidates greater number of vacancies
As the agency market develops the velocity of job change increases
www.SThree.com SThree plc 41 An Underdeveloped Recruitment Market
Value of the employment services market in 2008, $US billions 60 49.6 bn
50 Investor Day 2010 Day Investor 40
30 20.9 bn
20
10
0
UK Germany Population Population 82 61.4 million million Lower level temporary/contract placement services dominated the Germany employment services market, accounting for over 80% of the market’s value. Therefore, the specialist staffing market is still considerably less mature.
Source: Datamonitor
www.SThree.com SThree plc 42 The German Staffing Market
SPECIALIST HIGHER AVERAGE FEE Investor Day 2010 Day Investor
LOWER GENERALIST AVERAGE FEE
www.SThree.com SThree plc 43 The Fourth Largest Economy In The World
2008 GDP, millions of current USD
USA 14,441,425
Japan 4,910,692 Investor Day 2010 Day Investor
China 4,327,448
Germany 3,673,105
France 2,886,951
UK 2,680,000
Italy 2,313,893
Russia 1,676,586
Spain 1,601,964
Brazil 1,572,839
$0 $2,000,000 $4,000,000 $6,000,000 $8,000,000 $10,000,000 $12,000,000 $14,000,000 $16,000,000
Source: IMF, World Economic Outlook Database, October 2009: Nominal GDP list of countries. Data for the year 2008
www.SThree.com SThree plc 44 German Economy Heavily Impacted By The Recession, But On The Way To Steady Recovery
2005 – 2009, quarter on previous year quarter GDP growth, select countries
4.0 Actual Forecast
3.0 Investor Day 2010 Day Investor 2.0
1.0
0.0 2006 2007 2008 2009 2010 2011 2012 2013 2014 -1.0
Germany -2.0 Japan United Kingdom -3.0 United States Euro area -4.0
-5.0
-6.0
Source: IMF; forecasts October 2009
www.SThree.com SThree plc 45 German GDP Breakdown By Sector
Agriculture 1%
Industry &
Investor Day 2010 Day Investor Manufacturing 30%
Services & Finance 69%
Germany has a surprisingly large services sector. Industry and manufacturing specialise in high value, highly engineered products
Source: Official Statistics www.SThree.com SThree plc 46 Germany – A Decentralised Country
Germany Population: 82 million
Hamburg Düsseldorf (NRW) Population: 1.8 million Population: 18 million GDP: €90 billion GDP: €541 billion IT, Engineering, Investor Day 2010 Day Investor IT, Engineering, Accountancy Accountancy
Berlin Frankfurt (Hessen) Population: 3.7 million Population: 6 million GDP: €82 billion GDP: €220 billion Engineering, Accountancy, IT, Engineering, Public Sector Accountancy, Banking & Finance, Pharma/Life Sciences Munich (Bavaria) Population: 12.5 million GDP: €434 billion Stuttgart (BW) Population: 10.7 million IT, Engineering, GDP: €330 billion Accountancy, Pharma/Life Sciences IT, Engineering, Accountancy Source: GT&I; latest figures
Note: GDP relates to the corresponding Federal State www.SThree.com SThree plc 47 Germany – Current SThree Presence
Germany Düsseldorf (NRW) Population: 82 million
Hamburg Investor Day 2010 Day Investor
Frankfurt (Hessen)
Munich (Bavaria)
Stuttgart (BW)
Source: GT&I; latest figures www.SThree.com SThree plc 48 Investor Day 2010 Day Investor Maximising The Opportunity Reichstag dome
www.SThree.com SThree plc 49 SThree – A Decade Of History & Investment In Germany
SThree now has 11 offices
Investor Day 2010 Day Investor 4th SThree brand enters German market Office = Brand physical presence in location
3rd SThree brand enters German market 2nd SThree brand Business enters German Established post market liberalisation of German market
SThree has been established since 1999 in Germany. However, it is in the relatively recent past that growth has accelerated
www.SThree.com SThree plc 50 German Market By Sector & Brand
Pharma/Life Banking & IT Accountancy Engineering Sciences Finance
Investor Day 2010 Day Investor
www.SThree.com SThree plc 51 Germany – A Broad Portfolio Of Clients
Pharma/Life Banking & IT Accountancy Engineering Sciences Finance
Investor Day 2010 Day Investor Large
Medium
Small
www.SThree.com SThree plc 52 Despite Economic Backdrop, SThree Achieved Strong Growth In 2009
Runners at Period End Perm Placements
+21.8% +17.6% 1,318 500 1,400 436 Investor Day 2010 Day Investor 450 1,121 1,200 400 358 1,000 350
300 800 250 600 200
150 400 100 200 50 0 0
GERMANY GERMANY
2008 2009 2008 2009
Both Permanent and Contract saw strong volume growth in 2009
Source: SThree Accounts
www.SThree.com SThree plc 53 Some Trade Off Between Volume & Value
Perm Placement Fee - Consultant Headcount GPDR - Constant Currency Constant Currency -4.4% +19.7% -10.3% 120.0 107.2 12,809 188 102.5 14,000 Investor Day 2010 Day Investor 200 11,484 100.0 157 12,000
150 80.0 10,000
8,000 60.0 100 6,000
40.0 4,000 50 20.0 2,000
0 0 0.0 GERMANY GERMANY GERMANY
2008 2009 2008 2009 2008 2009
2009 deterioration in average fees not seen as a medium term issue
Source: SThree Accounts
www.SThree.com SThree plc 54 How Do Our German KPIs Compare With SThree Average?
Permanent Average Fees – Constant Currency GPDR - Constant Currency 2009 Consultant Headcount Growth
110 102.5 10,757 12,000 11,484 100 40 90 79.5 10,000 30 80 19.7% 20 8,000 70 SThree 60 10
Investor Day 2010 Day Investor Average 6,000 50 0 40 Germany 4,000 30 -10 2,000 20 -20 10 -30 0 0 -40 SThree Germany SThree Germany -35% Average Average
Perm/Contract Mix ICT/Non ICT Mix
Contract Contract Non ICT Non ICT 38% 30% 58% 28%
Perm Perm ICT ICT 42% 62% 72% 70%
SThree Average Germany SThree Average Germany
Source: SThree Accounts
www.SThree.com SThree plc 55 Germany Has Increasing Significance for SThree’s GP
Percentage of Total SThree Group GP
30 Investor Day 2010 Day Investor
25 20%
20 % 16%
15
10% 10 6%
5
0 2007 2008 2009 2010 YTD
Source: SThree Accounts
www.SThree.com SThree plc 56 Three Phases of SThree’s Development in the German Market
Increasing profitability
Investor Day 2010 Day Investor Staff (inter and intra brand) Establish business Contract & Permanent Branch network Single location New sectors Single sector Sector experience Single discipline Regional expansion (copy & paste)
Operational efficiency
PHASE I PHASE II PHASE III Build Diversify Leverage
SThree in Germany is now well established for significant further growth
www.SThree.com SThree plc 57 90% of SThree’s Staff In Germany Are German Investor Day 2010 Day Investor
www.SThree.com SThree plc 58 How Big Might the German Market Be For SThree?
c. 1000 staff 50 1000
900
40 800
Investor Day 2010 Day Investor c. 700 staff 700
30 600 c. 500 staff 500
20 17 400 offices c. 300 14 staff No. No. Offices of 12 offices 11 300 offices Headcount Staff 10 c. 200 offices offices offices 10 200
100
0 0 2009 2010(e) 2011(e) 2012(e) 2013(e)
Given supportive market conditions, we believe a CAGR of c. 50% maybe achievable
www.SThree.com SThree plc 59 Challenges
• China's threat to German engineering • Ageing population (also opportunity) Investor Day 2010 Day Investor • Taxation of freelancers (but we are agnostic) • German business culture • Staff retention/motivation
www.SThree.com SThree plc 60 Summary
• Large economy with big SME bias • Strong structural growth Investor Day 2010 Day Investor • Attractive population/demographic profile • Well established business with mature, German staff • A substantial investment over time, now reaping rewards • Both SThree and the market have reached a tipping point • Potential to become SThree’s single, most significant market
www.SThree.com SThree plc 61 Singapore / Oil & Gas – A Case Study Stuart Clark – Senior Regional Manager – March 2010 Investor Day 2010 Day Investor
www.SThree.com SThree plc 62 Agenda
• My SThree Profile
Investor Day 2010 Day Investor • Why Singapore?
• The Oil & Gas Opportunity
• Growth Plans & Summary
www.SThree.com SThree plc 63 SThree Profile – Stuart Clark
• Marketing Degree & Post Graduate certificate in IT Strathclyde University
• Joined May 2002 – Scotland Progressive IT Permanent Investor Day 2010 Day Investor • Top biller on Scotland IT Contract
• 2005 – Promoted to Manager of Scotland IT Contract
• 2006/07 – Started Scotland Oil & Gas – SThree’s 1st Oil & Gas team
• 2008 – Promoted to Senior Regional Manager and managing Glasgow and Leeds offices
• 2008 – Started South-East Asia Oil & Gas from Glasgow
• 2009 – Moved to set up Progressive Singapore
www.SThree.com SThree plc 64 Why 2010 Day Investor Singapore?
www.SThree.com SThree plc 65 Singapore – A World Class Economy
• High GDP capita, comparable to western standards – Singapore average was $35,495 in 2009, UK was $35,728 • Exceptionally strong economy – fell into recession because of globalised economy, however 7% growth is predicted for 2010 Investor Day 2010 Day Investor • A global trading centre – World’s 4th largest centre for Forex trading, world’s busiest port • A regional leader – A gateway to South East Asia. Singapore is also a leading global financial centre. Two countries – Indonesia and Vietnam - in the Next Eleven (the new BRICs as deemed by Goldman Sachs) are in SE Asia.
www.SThree.com SThree plc 66 Wealthy By Any Standards…
GDP per capita USD Investor Day 2010 Day Investor
Source: IMF 2009 www.SThree.com SThree plc 67 Singapore – The Sharp Bounce Back From Recession
GDP growth Singapore, actual and forecast
10% Investor Day 2010 Day Investor 8%
6%
4%
2%
0%
-2% 2006 2007 2008 2009 2010 2011
-4% Source: UBS estimate
www.SThree.com SThree plc 68 Confidence Is Growing Within Singapore & Across Asia
• According to the HSBC Small Business Confidence Monitor, business confidence across Asia has returned to pre global financial crisis levels. The survey is based on the outlook of SMEs Investor Day 2010 Day Investor on areas including economic growth, investment and recruitment plans
• Singapore in particular has recorded one of the largest improvements. The country scored the highest in Asia on the proportion of SMEs that expect stable or faster growth
• Less than 2 % of companies in Singapore plan to reduce their workforce in the next 6 months
Source: Compiled by Z/Yen for the City of London Corporation www.SThree.com SThree plc 69 Singapore Is A Major Regional & Global Banking Centre
Global financial centres Global Financial Centres Index (GFCI) rating Top 10 Asia is catching up March September 2010 2009 ranking ranking
Investor Day 2010 Day Investor London =1 (1)
New York =1 (2)
Hong Kong 3 (3)
Singapore 4 (4)
Tokyo 5 (7)
Chicago 6 (8)
Zurich 7 (6)
Geneva 8 (9)
Shenzhen =9 (5)
Sydney =9 (11) Main areas of competitiveness 2007 2008 2009 2010 Business Environment People Infrastructure Market access
Source: Compiled by Z/Yen for the City of London Corporation www.SThree.com SThree plc 70 Singapore – A Diverse Economy
GDP breakdown by industry
Other Services Hotels & Restaurants Industries Ow nership of Financial Services2% 10% 13% Dw ellings 4% Information &
Investor Day 2010 Day Investor Communications 4%
Manufacturing 23%
Business Services 13%
Construction 5% Transport & Storage Utilities 9% Wholesale & Retail 2% Trade 15%
Source: Singapore Ministry of Trade & Industry www.SThree.com SThree plc 71 Singapore – An Ideal Business Environment
• Business friendly environment – Ranked 1 for ease of doing business, 4 for starting a business, 1 for employing workers (World Bank) • Highly educated and mobile workforce – 36% of total workforce are ex-pats, rising to
Investor Day 2010 Day Investor 50% of the services sector. 43% of 25-39 year olds are university graduates – who will all speak English. • Stable social situation – Country is not fragile, i.e. China’s social stability is reliant on maintaining around 8% growth. Singapore has no ‘ticking bomb’ of social problems • Relatively immature staffing market – Although there are a number of large agencies in Singapore none of them are able to offer the multi-sector, multi-industry model that SThree has to offer • Singapore enjoys a very stable political system, there has only been two changes of leadership in the past 40 years • Ex-pat & family friendly – A good place for relocators, high standard of living, good education and famously clean!
www.SThree.com SThree plc 72 The Gateway To Asia Investor Day 2010 Day Investor
www.SThree.com SThree plc 73 Malaysia & Thailand – Pushed Into Recession But Recovering Faster Than The Rest Of The World
M alaysia Thailand 8 UK Euro area
World 6 Investor Day 2010 Day Investor
4
2
0
%GDP Growth 2006 2007 2008 2009 2010 2011
-2
-4
-6
www.SThree.com SThree plc 74 Indonesia & Vietnam – Riding Out The Global Downturn & Continuing Strong Growth GDP growth, actual and forecast constant prices
9 Indonesia
Vietnam 8 Investor Day 2010 Day Investor
7
6
5
4 % GDP Growth GDP % 3
2
1
0 2006 2007 2008 2009 Source2010 : UBS 2011
Source: IMF, World Economic Outlook October 2009
www.SThree.com SThree plc 75 IT & Banking – Our Markets Show Strong Growth
IT – a fast growing sector with immediate wins IT spending is projected to grow faster in 2010, building on momentum from a pick-up in consumer spending in the second half of last year. The market is forecast by BMI to increase from US$5.1bn in 2010
Investor Day 2010 Day Investor to around US$5.9bn in 2014. Recruitment trends are positive in this area. 60% of companies expect to grow headcount in Q1 2010, this is a sharp increase of 36% from the last quarter
Banking and finance – set for a dramatic upturn Singapore's banking sector has managed to survive the global financial crisis without suffering severe damage. The banking and financial services sector reports the highest recruiting expectation this quarter, with 69% planning to hire more staff
www.SThree.com SThree plc 76 Pharma & Accountancy – Lucrative
Pharma – a rapidly growing market Singapore is a major pharmaceutical manufacturing hub. Pharmaceutical spending will increase from US$568mn in 2008 to US$753mn in 2019. Pharmaceuticals now account for more than 16% of the
Investor Day 2010 Day Investor country’s manufacturing production.
Accountancy – set for a shake up The accounting sector in Singapore is well developed, comprising of the Big Four as well as over 500 small and medium audit practices (SMPs). Ministry of Finance and Committee to Develop the Accountancy Sector (CDAS) have mapped out a strategic vision to help develop Singapore into a leading global accountancy hub over the next decade. Recruitment demand is likely to pick up considerably as companies replace redundancies over the past couple of years.
www.SThree.com SThree plc 77 Singapore – Competitor/Comparator Pyramid
SPECIALIST HIGHER AVERAGE FEE Investor Day 2010 Day Investor
LOWER GENERALIST AVERAGE FEE
www.SThree.com SThree plc 78 Business Comparison
IT- Non IT Split 2009
SThree Singapore
NON IT IT 28% 29% Investor Day 2010 Day Investor
IT NON IT 72% 71%
Perm – Contract Split 2009
SThree Singapore
Contract Perm 4% 42%
Contract 58% Perm 96%
Source: SThree Accounts www.SThree.com SThree plc 79 Sector Diversification Leads To Global Opportunities
The Glasgow/Singapore Example
SINGAPORE
IT
Investor Day 2010 Day Investor SCOTLAND SCOTLAND SE ASIA SE ASIA SINGAPORE IT Oil & Gas Oil & Gas Oil & Gas Banking Virtual Office Based Glasgow Based Glasgow Based Glasgow Based Singapore SINGAPORE
Accountancy
PHASE I PHASE II PHASE III PHASE IV PHASE V Established IT North sea oil and Opportunities to Physical relocation Due to physical franchise looks to gas market a extend oil and gas to Singapore proximity a number diversify logical next step market to SE Asia initially to focus on of new markets remotely oil and gas market become accessible 2005/6 2006 2008 2009 2009
www.SThree.com SThree plc 80 The 2010 Day Investor Oil & Gas Opportunity
www.SThree.com SThree plc 81 Oil – Plummeting Prices Because Of The Recession, But Recovery Underway
WTI crude oil front month futures, 2005-present Investor Day 2010 Day Investor
Source: Financial Times, Bloomberg
www.SThree.com SThree plc 82 The Futures Market Predicting Steady Growth Investor Day 2010 Day Investor
www.SThree.com SThree plc 83 Long-term Demand For Energy To Increase Globally
• Global energy demand is likely to grow 40% by 2030 (International Energy Agency) • Demand will fluctuate mirroring the economic climate (i.e. oil prices fell sharply Investor Day 2010 Day Investor during the recession) – but growing demand from the BRIC countries will ensure that demand will grow in the long term • The recession has mostly impacted smaller and midsize producers, bigger producers continue to plan for the future • Attracting and retaining skilled workers will be one of the biggest risks to the industry’s success; 70% of global companies say that this issue is critical and is of highest priority • High margin recruitment opportunities – an experienced rig worker can earn $100,000; top engineers $500,000
www.SThree.com SThree plc 84 A Regional Centre For Oil & Gas
• Despite not having any oil or gas fields, Singapore is a key supplier of oil and gas equipment and services to the world • Singapore is one of the world’s top three export refining centres Investor Day 2010 Day Investor • Singapore is the world’s third largest oil and oil products trading hub, behind New York and London. • Singapore already has a supply of piped gas, and is looking at developing new supply of natural gas through the building of an LNG terminal (2012). • Singapore is a gateway to SE Asia allowing us to access Indonesia, Malaysia, Thailand and Vietnam.
www.SThree.com SThree plc 85 Further Opportunities In SE Asia
• Indonesia – The largest oil producer in SE Asia. 6 oil and gas upstream projects and facilities, (US$908.9 million), are expected to commence soon • Malaysia – The 27th largest oil producer in the world, ranked above Australia. Investor Day 2010 Day Investor Numerous projects in the immediate pipeline • Thailand – LPG imports to be stepped up; LPG imports this year could rise by as much as 33%. • Vietnam – A growing producer Vietnam opened its first oil refinery – Dung Quat – in 2009
www.SThree.com SThree plc 86 Great Opportunities In Oil & Gas Recruitment
• Severe skills shortage – 38% shortage of engineers and geoscientists and a c. 28% shortage of instrumentation and electrical workers by 2009. Deloitte estimates that in reality the skills shortage is much worse Investor Day 2010 Day Investor • The skills shortage is only set to become worse: In North America and Western Europe, industry statistics show that more than 50%, of the oil and gas industry’s engineers will reach retirement age by 2015. • Texas Tech University, Bachelor of Science degrees granted in petroleum engineering declined 74% between 1983 and 2006 • The skills shortage represents opportunity for us – as we can charge higher margins for sought after professionals • The oil and gas recruitment market is global – giving us opportunity to leverage off our global database
www.SThree.com SThree plc 87 A Selection Of Our Clients Investor Day 2010 Day Investor
www.SThree.com SThree plc 88 Growth Plans In Singapore
• Highly experienced team now based in Singapore
Investor Day 2010 Day Investor • Further specialisation within Energy, IT and Banking
• Diversification into new sectors already covered by SThree – Pharmaceuticals, Accountancy, Legal, Supply Chain and Logistics
• Doubling of Headcount by end of 2010
• New territories researched, mapped and tested from Singapore
www.SThree.com SThree plc 89 Oil & Gas – Our Plans For Growth
• A global presence, in all key strategic locations: From Houston to Saudi to Rio to Moscow. We intend to be in all the key oil and gas centres globally • Covering more segments of the market: To date we have focussed on Investor Day 2010 Day Investor upstream, going forward we will also service downstream. We are also keeping an eye on Renewables – in order to make a decision on expanding the sector • Expanding our business model: We currently mostly offer permanent placements. We are shortly extending our service to contract as well offering a more diversified revenue stream.
www.SThree.com SThree plc 90 Oil & Gas – Indicative Future Footprint Investor Day 2010 Day Investor
Current locations 2010 2011 2012 2013 London Qatar Saudi Arabia Brazil South Africa Amsterdam USA Malaysia Bahrain Glasgow Indonesia Norway Singapore Canada Russia Perth Abu Dhabi www.SThree.com SThree plc 91 Conclusions
• Singapore offers SThree a diverse range of opportunities – We have already built up a strong presence in Oil & Gas, Banking
Investor Day 2010 Day Investor and IT in just over a year of trading in country
• Singapore offers us a gateway to South-East Asia – Indonesia & Vietnam have been identified amongst the Top 11 emerging global economic powers
• Oil & Gas offers SThree a huge opportunity in a growing global market place – We are in Aberdeen, London, Amsterdam, Perth and Singapore but the journey has only just begun.
www.SThree.com SThree plc 92 IT As A Strategic Differentiator David Timoney – Information Services Director – March 2010 Investor Day 2010 Day Investor
www.SThree.com SThree plc 93 Agenda
• Introduction – All about me, all about SThree • We don’t sell people Investor Day 2010 Day Investor – What is the value of information to a recruitment business? • Everything changes, everything stays the same – The impact of technology and new media on recruitment • The SThree difference – What do we do that’s different, what do we do that’s better • The vision thing – What does the information technology future look like?
www.SThree.com SThree plc 94 Introduction
• David Timoney – SThree Director of Information Services • 1984 to 1997: Chevron UK – Oil & gas, exploration & production, EMEA Investor Day 2010 Day Investor – High-tech earth sciences + global corporate IT – Early adopter: Web technology & business process reengineering • 1997 to today: SThree Plc – Common, scalable IT infrastructure designed for global operations – Standard sales systems with multi-brand delivery – High-volume transaction processing via online presence – Ability to flex across sectors and geographies
www.SThree.com SThree plc 95 Introduction
• 27,000 online adverts – Automation distributes across a network of jobboards and aggregators – Allows fine-grained management of quotas and thus ROI
Investor Day 2010 Day Investor • 227,000 incoming CVs – Automation has reduced processing overhead from 45 to 2.5 FTE and improved turnaround from 3 days to 10 minutes (max) • 5.8 million outgoing + 24 million incoming emails (22 million spam) • 2.7 million client records + 4.3 million candidate records – Xing has 8.3 million registered users (Sep-09) • 13,000 timesheets – 94% of contractors using online timesheets (target 100% by year-end) – Processing heads down from 30 (2.5k runners, 2002) to 10 (4k runners)
www.SThree.com SThree plc 96 The Value Of Information
• Recruitment is relationship management
• Recruitment is episodic and promiscuous Investor Day 2010 Day Investor • Good recruitment depends on memory
• Good recruitment depends on current insight
• Good recruitment = good knowledge management
• The foundation of knowledge is information
www.SThree.com SThree plc 97 The Impact Of Technology & New Media
The big change over 25 years has been a massive increase in scale Increase in relationships for each recruitment episode is geometric: post fax email online search & apply networking Investor Day 2010 Day Investor High-tech (microfiche) Media awareness
Get on the phones KPI Focus
www.SThree.com SThree plc 98 The Impact Of Technology & New Media
• The IT crowd expect to use IT
– There is pressure to be innovative and an early adopter
Investor Day 2010 Day Investor • We recruit mid-20s graduates used to online paradigms
– Need to get productive quickly, need to raise ability of all
• We launched our own job board: TheITJobBoard
– A defensive play in respect of media supply that turned into
• A valuable asset
• A great learning opportunity
www.SThree.com SThree plc 99 The Impact Of Technology & New Media
• The impact of professional networking sites • New ways of doing the same things
Investor Day 2010 Day Investor What do you use professional networking sites like Linkedin and Xing for?
Get headhunted
I don’t really use it – I joined because everyone else has
Keep up to date with the status of ex Germany colleagues UK
Keep abreast of the latest industry news
Build up a profile of business contacts
0% 20% 40% 60% 80% 100%
www.SThree.com SThree plc 100 The Impact Of Technology & New Media
Which channels do you use most when job hunting?
Targeting companies and contacting them directly/emailing CVs Investor Day 2010 Day Investor
Personal networking via personal contacts
Job Boards
So cial networking si tes such a s Facebook Germany Professional n etworking sites such UK as LinedIn or Xing
Recruitment consultants
Newspapers / Magazines (online)
Newspapers / Magazines (print)
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
www.SThree.com SThree plc 101 The Impact Of Technology & New Media
• New media does not disintermediate – This is a 10 year old threat that never transpired (cf estate agency) – Candidate control is the hard work
Investor Day 2010 Day Investor – Technology can’t do it, it’s a people thing – Media providers won’t do it, any more than employers will
• Social media networking = networking Have you ever landed a job via a professional network? – The key is personal online presence – The paradigm shift is how much No personal information we now hold Germany online UK
– The challenge is harvesting Yes information and nurturing relationships 0% 20% 40% 60% 80% 100%
www.SThree.com SThree plc 102 The Impact Of Technology & New Media
• The candidate is the campaign … Investor Day 2010 Day Investor
www.SThree.com SThree plc 103 The SThree Difference
• Integrated sales system: Apollo – Siebel CRM + Siebel Marketing for relationship management – Bespoke candidate management: advertising, response-handling,
Investor Day 2010 Day Investor search & selection, shortlisting, contact, CV distribution – We don’t have variety as the legacy of mergers & acquisitions • Common backoffice – SAP ERP: integrated order-to-cash, accounting, HR and payroll – Bespoke commissions system: sensitive, flexible and motivational • Global management information – Sales KPIs monitored via Apollo, MIS and electronic whiteboards – Investment in Business Objects to span sales, finance and HR
www.SThree.com SThree plc 104 The SThree Difference
• Multi-brand, multi-sector, multi-geographic online presence – Our websites are transaction engines in a common framework • Common, global IT infrastructure Investor Day 2010 Day Investor – Citrix provides a small local footprint, global network, with seamless access to shared data – Our common desktop supports corporate mobility
• Hackett Group benchmarking: Jan 2010 – IT landscape and enterprise architecture rated as mature: effective – Cost of IT low compared to peers & world class: efficient
www.SThree.com SThree plc 105 The SThree Advantage
• We’re information management experts
Investor Day 2010 Day Investor • We have a mature technology capability
• We have a “go anywhere” infrastructure
• We can easily extend to new sectors and geographies
• We’re reaping the benefit of a decade of investment
• We’re designed for growth
www.SThree.com SThree plc 106 The Future Of Information Technology
• A means to nurture relationships
• A means to build knowledge about customers Investor Day 2010 Day Investor • A means to develop understanding of our business
• Corporate memory, market foresight
• IT is a strategic differentiator for SThree
• The future is now
www.SThree.com SThree plc 107 Demonstration Of Apollo & MIS Andy Hallett – Head of Business Systems & Process – March 2010 Investor Day 2010 Day Investor
www.SThree.com SThree plc 108 Notes Investor Day 2010 Day Investor
www.SThree.com SThree plc 109 Notes Investor Day 2010 Day Investor
www.SThree.com SThree plc 110 Notes Investor Day 2010 Day Investor
www.SThree.com SThree plc 111 Notes Investor Day 2010 Day Investor
www.SThree.com SThree plc 112 Notes Investor Day 2010 Day Investor
www.SThree.com SThree plc 113 Notes Investor Day 2010 Day Investor
www.SThree.com SThree plc 114