STHREE INVESTOR DAY 2014
1 STHREE STRATEGY EVOLUTION NOT REVOLUTION
GARY ELDEN
2 THE AGENDA FOR TODAY
14.00 – 14.05 Introduction GE
14.05 – 14.30 SThree Strategy – Evolution not Revolution GE Strategic positioning 5 point plan
14.30 – 14.50 Plan To Triple Profits AS Contract
14.50 – 15.15 Energy JH
15.15 – 15.20 Q&A ALL
15.20 – 15.45 Comfort Break & Tech Demo ALL
15.45 – 16.15 USA SQ
16.15 – 16.45 Life Sciences SQ
16.45 – 17.15 Wrap up/Q&A GE/ALL
17.15 – 18.00 Drinks, opportunity to meet management ALL
www.sthree.com | SThree plc 3 TIMELINE
www.sthree.com | SThree plc 4 STHREE STRATEGIC POSITIONING Ø Pure play STEM specialist staffing
company OUR Ø Multi-Brand approach DNA Ø Entrepreneurial culture
Ø Contract & Permanent
Ø Global database for global candidates
www.sthree.com | SThree plc 5 PURE PLAY STEM SPECIALIST STAFFING COMPANY
PERM SALARY £55k
CONTRACT PRO- RATA £93k
OUR SECTORS Banking & Finance Energy Engineering ICT Life Sciences
www.sthree.com | SThree plc 6 STHREE STRATEGIC POSITIONING Ø Pure play STEM specialist staffing company
Ø Multi-Brand approach
Ø Entrepreneurial culture
Ø Contract & Permanent
Ø Global database for global candidates
www.sthree.com | SThree plc 7 MULTI BRAND APPROACH
www.sthree.com | SThree plc 8 STHREE STRATEGIC POSITIONING Ø Pure play STEM specialist staffing company
Ø Multi-Brand approach
Ø Entrepreneurial culture
Ø Contract & Permanent
Ø Global database for global candidates
www.sthree.com | SThree plc 9 ENTREPRENEURIAL CULTURE
Tracker Shares - how they work ≤ 22.5% Sold To Investor
≤ 22.5% Sold To Investor
5 YEARS
≥ 77.5% Owned by ≥ 77.5% Owned by SThree SThree
Business valued at an early stage Exit Value ½ - ⅔ x PAT x PER
• Strong governance via MI Steering Committee • 2013 buy backs £7m, 2012 £10m • Expect future buy backs to be £5-£15m in shares • Buyouts entirely at SThree’s discretion – no put option
Drives strong retention and ownership behaviours
www.sthree.com | SThree plc 10 STHREE STRATEGIC POSITIONING Ø Pure play STEM specialist staffing company
Ø Multi-Brand approach
Ø Entrepreneurial culture
Ø Contract & Permanent
Ø Global database
www.sthree.com | SThree plc 11 CONTRACT AND PERMANENT
12% CAGR
PERM 35% PERM 44% PERM 2008 2013 2018 48% CONTRACT % of GP 52% % of GP CONTRACT % of GP 56% CONTRACT 65%
• Headcount on Contract now 50% first time in our history
• Perm still has massive growth potential, especially in our core established locations
www.sthree.com | SThree plc 12 STHREE STRATEGIC POSITIONING Ø Pure play STEM specialist staffing company
Ø Multi-Brand approach
Ø Entrepreneurial culture
Ø Contract & Permanent
Ø Global database for global candidates and clients
www.sthree.com | SThree plc 13 GLOBAL DATABASE FOR GLOBAL CANDIDATES AND CLIENTS
GLOBAL CANDIDATES PROVIDE AN ABILITY TO TAKE LARGER GEOGRAPHICAL STEPS
APPROX 50% OF CONSULTANTS ARE WORKING ON GLOBAL CANDIDATE MARKETS
90% OF DEAL GP FROM TOP 50 CLIENTS IN GLOBAL SECTORS
www.sthree.com | SThree plc 14 STHREE GROWTH – 5 POINT PLAN 1. Regional growth opportunities
2. Sectors
3. Contract
4. Organic growth/M&A
5. Infrastructure for growth
www.sthree.com | SThree plc 15 REGIONAL GROWTH OPPORTUNITIES
www.sthree.com | SThree plc 16 REGION
Americas APAC/ME 2% 2%
APAC/ME 9% APAC/ME DACH 10% France 10% UK&I 5% Americas UK&I 24% 11% 31% 12% Americas CAGR 22% 2008 2013 2018 % of GP8% % of GP % of GP CAGR UK&I 56% DACH Benelux Benelux 25% 13% 25% Benelux 18% 22% DACH CAGR 28% France 3%
France6% CAGR6%
• UK Still down 50% from its peak headcount and GP
• DACH Immature market We have a strong regional presence Very strong in STEM
• USA H1 2014 represents 14% of the group Fastest growing region over the last 3 years Has the biggest market and highest growth potential
www.sthree.com | SThree plc 17 STHREE GROWTH – 5 POINT PLAN
1. Regional growth opportunities 2. Sectors
3. Contract
4. Organic growth/M&A
5. Infrastructure for growth
www.sthree.com | SThree plc 18 SECTOR
Other Other Other 3% 1% Life Sciences 4% 2%
ENG 7% Life Sciences Life Sciences 15% ICT 20% 32%
Banking & ICT 43% Finance 2008 ENG 2013 2018 16% 12% % of GP % of GP ENG % of GP 10%
IT Energy Banking & 71% 12% Finance 12% Banking & Energy Finance 25% 15%
• ICT Only 4% of our business is outside of Europe, so massive growth opportunity
• LIFE SCIENCE Resilient market. Not as competitive. Potential to be the market leader. Only working a small percentage of the market
• BANKING & FINANCE Strong office footprint. One of the biggest players in the market
• ENERGY Fastest growing sector. Global footprint
www.sthree.com | SThree plc 19 STHREE GROWTH – 5 POINT PLAN
1. Regional growth opportunities
2. Sectors 3. Contract
4. Organic growth/M&A
5. Infrastructure for growth
www.sthree.com | SThree plc 20 CONTRACT - THE STRATEGIC CASE
Seasoned contactors in STEM Markets
Resilient in uncertain markets and strong as markets improve
Established regions strong on Contract
USA specialist staffing market 80-90% Contract
Strong sector play staffing Energy Contract dominated
UK&I CONTINENTAL AMERICAS APAC & ME
CONTRACT CONTRACT PERM 47% 24% 30%
PERM 45% PERM 53% PERM 76% CONTRACT CONTRACT 70% 55%
www.sthree.com | SThree plc 21 CONTRACT AND PERMANENT
PERM 35% PERM PERM 44% 2013 2018 48% 2008 CONTRACT % of GP 52% % of GP CONTRACT % of GP 56% CONTRACT 65%
• Headcount for the first time in our history on Contract is the same size as Perm
• Perm still has massive growth potential, especially in our core established locations
www.sthree.com | SThree plc 22 STHREE GROWTH – 5 POINT PLAN
1. Regional growth opportunities
2. Sectors
3. Contract 4. Organic growth/M&A
5. Infrastructure for growth
www.sthree.com | SThree plc 23 ORGANIC GROWTH
DACH AMERICAS 1 Managing Director 1 Regional CEO 1 Director 5 Directors 4 Managers 14 Managers
BENELUX SECTOR HEADS 3 Directors 2 Directors
MIDDLE EAST
2 Directors APAC 4 Managers 5 Consultants 1 Regional CEO 3 Directors 6 Managers 14 Consultants
www.sthree.com | SThree plc 24 M&A Talent
• Acquisition of key personnel: Region: Japan and Russia Sector: Energy
• Tracker shares helps attract and retain staff
Businesses
• Actively engaged in looking at opportunities
• Small bolt on to expedite access to:
New Geographies New Sectors
• Taking a measured approach
www.sthree.com | SThree plc 25 STHREE GROWTH – 5 POINT PLAN
1. Regional growth opportunities
2. Sectors
3. Contract
4. Organic growth/M&A 5. Infrastructure for growth
www.sthree.com | SThree plc 26 INFRASTRUCTURE FOR GROWTH…….
The Group will benefit from operational gearing into recovery
www.sthree.com | SThree plc 27 KEY TAKEAWAYS
GROWTH WITHIN EXISTING - Sectors - Regions - Infrastructure
CONTRACT PERM
- High Growth potential within - Confidence in market creates churn = improving yields and STEM Markets productivity PEOPLE- High barriers to entry - Niche focus will see improving fees in core regions - Robust in all markets - Plenty of room to grow
PEOPLE We have the opportunities and reward mechanism to keep and attract the best talent
www.sthree.com | SThree plc 28 ALEX SMITH: CFO FINANCIALS PRESENTATION
www.sthree.com | SThree plc 29 AGENDA
1 PLAN TO TRIPLE PROFITS
2 CONTRACT
www.sthree.com | SThree plc 30 FINANCIAL 5 YEAR PLAN
www.sthree.com | SThree plc 31 GROUP FINANCIAL 5 YEAR PLAN – SCENARIOS
2013 5 year
Low Medium* High
Gross Profit £193m £290m £325m £390m
+9% +12% +16% CAGR CAGR CAGR
Operating Profit £21m £54m £73m £107m
+20% +28% +38% CAGR CAGR CAGR
CR% 11% 19% 23% 28%
Headcount 1,458 2,155 2,490 2,770
+7% +10% +14% CAGR CAGR CAGR
* Objective assumes achieving the medium case operating profit objectives. Nothing in this presentation should be construed as a profit reforecast. There is no certainty over profitability or timing of achieving these objectives and they are dependant upon a variety of assumptions and factors. They assume constant FX rates as of November 2013
As a Medium case, we can both triple & diversify group profits
www.sthree.com | SThree plc 32 INFRASTRUCTURE FOR GROWTH…….
The Group will benefit from operational gearing into recovery
www.sthree.com | SThree plc 33 HEADCOUNT BY REGION - 5 YEAR PLAN
800
700 10% CAGR MEDIUM CASE 600 6% CAGR GROUP 12% HEADCOUNTCAGR 500 CAGR OF +10% 17% 400 CAGR
3% 300 CAGR
200 5% CAGR
100
0 UK&I GERMANY BENELUX USA APAC
May-14 MEDIUM CASE
www.sthree.com | SThree plc 34 HEADCOUNT BY REGION - 5 YEAR PLAN
900
800 12% CAGR 700 8% 10% HIGH CASE CAGR 6% CAGR GROUP 600 CAGR HEADCOUNT12% CAGR 500 22% CAGR OF CAGR +14% 17% 400 CAGR 6% 3% CAGR 300 CAGR 9% CAGR 200 5% CAGR
100
0 UK&I GERMANY BENELUX USA APAC
May-14 MEDIUM CASE HIGH CASE
www.sthree.com | SThree plc 35 REGION
Americas APAC/ME 2% 12% 2% CAGR APAC/ME 9% APAC/ME 8% DACH 10% France 10% CAGR UK&I 5% Americas UK&I 24% 11% 31% Americas 22% 22% CAGR 2008 2013 2018 % of GP UK&I % of GP % of GP 56% DACH Benelux Benelux 25% 6% 13% 25% CAGR Benelux 18% DACH 28% France 3%
France 6%
Geographical shift towards Americas and DACH
www.sthree.com | SThree plc 36 SECTOR
Other Other Other 3% 1% Life Sciences 4% 12% 2% CAGR
ENG 7% Life Sciences Life Sciences IT 15% 20% 32%
Banking & IT 43% Finance 2008 ENG 2018 12% 2013 16% % of GP ENG % of GP % of GP 10%
Banking & IT Energy Finance 71% 12% Energy 12% Banking & 25% Finance 15%
Energy & Life Sciences expected to grow share
www.sthree.com | SThree plc 37 BUSINESS SHAPE
12% CAGR
PERM 35% PERM PERM 2008 44% 2013 2018 48% CONTRACT % of GP 52% % of GP CONTRACT % of GP 56% CONTRACT 65%
Further remix of the business towards contract
www.sthree.com | SThree plc 38 UNDER THE MEDIUM CASE SCENARIO OF OUR 5
YEAR PLAN WE WOULD:
Significantly increase the quality of earnings ✓ Increased exposure to contract market ✓ Greater geographical diversification ✓ Broader spread of disciplines
Significantly increase the profitability of the group ✓ Gross profit increasing by 12% CAGR ✓ Operating Profit up by more than three times
Increase the dividend ✓ Whilst substantially increasing dividend cover
www.sthree.com | SThree plc 39 CONTRACT
www.sthree.com | SThree plc 40 CONTRACT
Fact based insight from system investments
Contract life-time values > Permanent equivalent
Deploy resources strategically
Invest in different Contract models
Focus on Contract operational excellence
Financial results
www.sthree.com | SThree plc 41 FACT BASED INSIGHT FROM SYSTEMS INVESTMENTS
ENTERPRISE DATA WAREHOUSE
BEST IN BREED PLATFORMS GIVE UNIQUE INSIGHT
www.sthree.com | SThree plc 42 CONTRACT LIFETIME VALUE
CONTRACT PLACEMENTS CONTRACT CONSULTANTS MORE PRODUCTIVE • Run on average for 37 weeks • Doing 15% more DPH in H1 2014 • GP of c. £17k
• LTV 50% greater than permanent equivalent
Contract Consultants produce 60% more LTV per month in H1 2014
Note: Example relates to H1 2014, based upon SThree MIS at budgeted exchange rates www.sthree.com | SThree plc 43 CONTRACT LIFTIME VALUE
GP LTV c. 50% > PERMANENT EQUIVALENT
How does this convert to operating profit?
ADDITIONAL COSTS COMMISSION OF SUPPORT SAVING t -FHBM5FBN t PG t 5JNFTIFFUT $POUSBDUPST t *OWPJDJOH BSFPSQIBOFE
OP LTV c. 50% > PERMANENT EQUIVALENT
www.sthree.com | SThree plc 44 CONTRACT CONSULTANT HEADCOUNT INVESTMENT
1000 50% increase in 900 Contract Headcount over 800 2 years
700
600
500
400
300
200
100
0 May-12 Nov-12 May-13 Nov-13 Feb-14 May-14
www.sthree.com | SThree plc 45 DIFFERENT CONTRACT MODELS
Freelancer Model Employed Contractor Model - Seasoned contractor - Rolled out model in USA, Australia, Hong Kong & - Business to business relationship Singapore - Dominant model in the UK/ - No bench risk Europe - Mirror client and employee notice periods
100% 6% 9%
FY 2012 FY 2013 H1 2014
94% 91%
ECM Freelance ECM Freelance ECM Freelance
www.sthree.com | SThree plc 46 FOCUS ON CONTRACT OPERATIONAL EXCELLENCE
• Head of Contract role in UK&I/broadened to Europe
• Getting the operational basics right, the 5 point plan - Contractor Monitoring - Meetings - Job Spec - Negotiation - The Immediate Starter
• Management reporting tools - Margin discipline Strong Focus on - Dynamic contract modeller Roambi Extensions as - Mobile compatible well as Deals
www.sthree.com | SThree plc 47 THE RESULTS
Indexed Contract Runners - FY 7 Year Analysis (Annual Trend based on P12 Nov Year End Runners)
120%
115% 112% 112% 110% 109% 108% 105% 105%
100% 101%
95%
90%
85%
80%
75% 72% 70%
2008 2009 2010 2011 2012 2013 2014
www.sthree.com | SThree plc 48 THE RESULTS
Indexed Contract Runners - 2014 Q2 by Region (Annual Trend based on P12 Nov Year End Runners) 160%
Americas 150% 148% APAC & ME
5% 140% Americas Asia Pac & 13% Mid East 130% 142% France UK&I 5% RUNNERS 43% AS AT P6 2014 120% DACH DACH 17% 114% SThree 110% 112% Benelux 17% UK&I 107% 100% Benelux 98% France 94% 90% 2013 P12 2014 P1 2014 P2 2014 P3 2014 P4 2014 P5 2014 P6
UK&I Benelux France DACH Asia Pac & Mid East SThree Americas
www.sthree.com | SThree plc 49 CONTRACT GP GROWTH
2014 2013 GROUPS Q1 2014 Q2 2014 H1 2014 AVG HC H1 FY 2013 AVG HC FY 2013 GP YOY GP YOY GP YOY 2014 YoY GP YOY YoY UK&I 6% 12% 10% 17% (4%) 11%
BENELUX 5% 15% 10% 18% 3% 13% DACH 33% 47% 40% 38% 10% 29%
FRANCE 2% 4% 3% (11%) (17%) (15%)
APAC 17% 16% 16% 26% 17% 35% AMERICAS 90% 98% 95% 85% 61% 48% TOTAL 18% 26% 22% 25% 4% 16%
Investment in heads now paying back strongly
www.sthree.com | SThree plc 50 IMPACT ON CASH
Contract DSO vs. Candidate Payment Terms (Group Number)
45
40
35
30
25 DSO
Days 20 Candidate Terms 15
10 5
0 P12 P1 P2 P3 P4 P5 P6 P7 P8 P9 P10 P1 1 P1 2
Period
• Average funding of 16 days
• Approx W/C investment per runner of £8k
• Varies by country, sector and by contract model type
www.sthree.com | SThree plc 51 CONTRACT SUMMARY
• Fact Based Investment > Heads up 22% CAGR since May 2012
> New ECM model
• STEM Contractors > Resilient in uncertain markets > Strong as markets improve
• Some Forward Visibility
• Barriers to Entry > Relative complexity > Financial strength > Systems & processes > Different business models
• More profitable - LTV - Contract consultants more productive
Financial results coming through strongly www.sthree.com | SThree plc 52 JUSTIN HUGHES
CEO APAC & MENA
www.sthree.com | SThree plc 53 PROGRESSIVE GLOBAL ENERGY & NATURAL RESOURCES
STHREE’S GAME CHANGER
www.sthree.com | SThree plc 54 AGENDA
1 THE STORY SO FAR
2 MARKET OPPORTUNITY
3 OUR AMBITION & STRATEGY
4 WHERE COULD WE GO?
www.sthree.com | SThree plc 55 THE STORY SO FAR • Set up in 2007 • Today Global Energy accounts for 12% of group GP
www.sthree.com | SThree plc 56 ENERGY
Other Other Other 3% 1% Life Sciences 4% 2%
ENG 7% Life Sciences Life Sciences 15% IT 20% 32%
IT Banking & 43% Finance ENG 2018 16% 2008 12% 2013 % of GP % of GP ENG % of GP 10%
Energy Banking & IT Finance 71% 12% Energy 12% Banking & 25% Finance 15%
www.sthree.com | SThree plc 57 ENERGY
2013
CONTRACT 10% CONTRACT 47% PERM 25%
2008 2013 2018 % of GP % of GP % of GP
CONTRACT PERM 75% PERM 53% 90%
Perm is the door opener – unique to us in sector
www.sthree.com | SThree plc 58 ENERGY Region
APAC & UK&I, 17% MENA 23%
2013 Benelux, 14% UK&I 100%
France, 3%
Americas Germany, 32% 11% UK&I 20%
APAC + MENA 38% 2008 2013 % of GP % of GP
Europe 19%
Americas 24%
www.sthree.com | SThree plc 59 THE STORY SO FAR • Set up in 2007
• Today Global Energy accounts for 12% of group GP
• SThree’s fastest growing sector
www.sthree.com | SThree plc 60 Energy GP 2008 2010 2013 2014 2018 (GBP millions) GP - H1 0.4 0.4 9.7 14.0 ? GP - FY 1.0 1.6 22.7 ? ?
5.0 CONTRACT ENERGY 4.5 – ACCOUNTING GP
4.0 CAGR +75% 3.5 SINCE Q2 3.0 2012 Q2 2014 2.5 109% YOY
GBP millions GBP 2.0
1.5
1.0
0.5
0.0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 07 07 07 07 08 08 08 08 09 09 09 09 10 10 10 10 11 11 11 11 12 12 12 12 13 13 13 13 14 14
www.sthree.com | SThree plc 61 THE STORY SO FAR • Set up in 2007
• Today Global Energy accounts for 12% of group GP
• SThree’s fastest growing sector
• Global foundations in place
www.sthree.com | SThree plc 62 GLOBAL HUB MODEL
www.sthree.com | SThree plc 63 HUB: GLASGOW
www.sthree.com | SThree plc 64 HUB: THE HAGUE
www.sthree.com | SThree plc 65 HUB: HOUSTON
www.sthree.com | SThree plc 66 HUB: DUBAI
www.sthree.com | SThree plc 67 HUB: SINGAPORE
www.sthree.com | SThree plc 68 HUB: LONDON
www.sthree.com | SThree plc 69 HUB: PERTH
www.sthree.com | SThree plc 70 HUB: MOSCOW
www.sthree.com | SThree plc 71 GLOBAL HUB MODEL
www.sthree.com | SThree plc 72 GLOBAL HUB MODEL
Sarah Gaudry Head of O&G Payroll UK
Mike Walker Steven Winship Sector Head Operations UK Compliance & Logistics UK
Joris Verbeek Global Account Manager Houston
Abid Hamid Global Business Dev Director Dubai
Justin Hughes Hong Kong
Alistair Macfadyen Global Operations Manager Global
www.sthree.com | SThree plc 73 THE STORY SO FAR • Set up in 2007
• Today Global Energy accounts for 12% of group GP
• SThree’s fastest growing sector
• Global foundations in place
• Significant investment in our business model to overcome the barriers to entry on contract - ECM - Local entities - Insurances
www.sthree.com | SThree plc 74 ECM LOCATIONS
10% of our energy contractors have been “gifted” – we have taken over the management of contractors that we have not sourced because we are compliant
www.sthree.com | SThree plc 75 THE STORY SO FAR • Set up in 2007
• Today Global Energy accounts for 12% of group GP
• SThree’s fastest growing sector
• Global foundations in place
• Significant investment in our business model to overcome the barriers to entry on contract - ECM - Local entities - Insurances • Evolution of our front office delivery model with exciting implications for conversion ratios
www.sthree.com | SThree plc 76 EVOLUTION
£12 MILLION GLOBAL ENERGY NEW BUSINESS WRITTEN UP WITH TOP 10 CLIENTS 153%
STHREE NEW BUSINESS WRITTEN UP AT TOP 20 CLIENTS: INDUSTRY ANALYSIS
Energy 16%
Energy FY 2011 Other H1 2014 46% 54%
Other 84%
"* Represents 12 months rolling deal GP"
www.sthree.com | SThree plc 77 TITLEEVOLUTION
SThree average number of deals per client in 2013 was 2.3
Progressive Global Energy average number of deals per client in 2013 was 4.7
Oil and Gas sector average number of deals per client …?
www.sthree.com | SThree plc 78 MARKET OPPORTUNITY
• Global Energy Recruitment industry is a multi billion pound industry
- Global energy demand expected to increase 50% over next 3 decades - Industry is facing large skill shortages, with a significant percentage of the U.S industry workforce eligible for retirement in 5 to 10 years
• Project driven industry with high barriers to entry
• Long contract lifetime value
• Potential for entirely different conversion ratios - Brunel Energy conversion ratio in 2013 was 36%
• Demand for additional recruitment support services
• A gap in the market for quality recruitment skills and expertise
www.sthree.com | SThree plc 79 OUR AMBITION & STRATEGY “To provide a complete end to end service offering to our energy clients and combine that with our recruitment expertise”
www.sthree.com | SThree plc 80 OUR AMBITION & STRATEGY
Provide end to end services that are competitive with best in class
PRE MOBILISATION PROPOSED SHORT TERM EXPECTED DELIVERY DATE CENTRAL/REGIONAL/LOCAL
Health screening Outsourced Live Local
Project location safely and security induction Outsourced
Inoculations Advisory only Medical Insurance In-house Live Central Pre mobilisation briefing In-house Visa and Immigration Outsourced Live (Partners) Local Host country compliant employment agreements In-house Live (ECM or Partners) Local Background Checks In-house Live Local MOBILISATION Mobilisation flights In-house Live Regional Temporary accommodation booking Outsourced Live Regional Meet and greet inc. security services Outsourced Live (Partners) Regional/Local POST MOBILISATION Long-term accommodation Outsourced Registration for tax and social contributions In-house Live (ECM or Partners) Central Host country payroll In-house Live (ECM or Partners) Central Medical and health coordination Outsourced Live (Expat only) Outsourced to insurers Ongoing contact and care services In-house Live Regional 24 hour help line In-house Rotational Travel In-house Live Regional
www.sthree.com | SThree plc 81 OUR AMBITION & STRATEGY
Provide end to end services that are competitive with best in class
Provide project recruitment Transactional recruitment AND - Global client strategy - 360° consultants (job - Global services centric) - Client specialist - Technical niche resourcers specialists - Global database - Global database
Build two front office sales delivery models
Provide quality contract AND permanent recruitment - Established recruiters in sector overlooking permanent - We have proved it can be very profitable - There is a real need and desire from clients for both services from the same recruitment agency
www.sthree.com | SThree plc 82 1 PROJECT DRIVEN MODEL (FARMING)
www.sthree.com | SThree plc 83 2 JOB DRIVEN MODEL (HUNTING)
www.sthree.com | SThree plc 84 WHERE COULD WE GO?
www.sthree.com | SThree plc 85 SUMMARY • Unique sector opportunity • Another SThree in 5 years? • Is this the sign of things to come? STHREE’S GAME CHANGER
www.sthree.com | SThree plc 86 STHREE USA STEVE QUINN OUR LAND OF OPPORTUNITY
www.sthree.com | SThree plc 87 STHREE USA OUR LAND OF OPPORTUNITY • American Ambition • Why the USA? • American History • Strategic Choices • Infrastructure For Growth • The Future • Conclusion
www.sthree.com | SThree plc 88 AMERICAN AMBITION
To be the most To become a major profitable region player in the US in the SThree specialist staffing world sector
www.sthree.com | SThree plc 89 WHY THE USA?
• Scale and Shale - Everything’s bigger in America
• Largest STEM markets
• Largest Tech marketplace
• Largest Life Sciences marketplace
• Largest Financial Services marketplace
• Largest Natural Gas producer in the world
• Soon to be the Largest Oil producer in the world
www.sthree.com | SThree plc 90 GOLDMAN SACHS AGREE
1. SCALE The U.S. is home to a $15.7 trillion economy, the world’s largest and wealthiest. That’s double the size of China’s annual economic output, 2.5 times that of Japan’s and 4.5 times that of Germany’s.
2. LAND, WATER & ENERGY: The U.S. outstrips the rest of the world (save Russia) when it comes to natural resources-energy, water, minerals. America has 4.6 times more water resources and 5.3 times more arable land than China. It is also on track to become the world’s biggest oil producer by 2020, ahead of Russia and Saudi Arabia, according to the International Energy Agency.
3. TALENT MAGNET: Nearly 40% of U.S. researchers migrated from other countries, according to a 2012 National Bureau of Economic Research working paper cited by Goldman.
4. R&D POWERHOUSE: The U.S. generated about 31% of global R&D expenditures in 2012. That’s about $436 billion in spending by government, industry and universities.
5. INSOURCING BOOM: A conga line of U.S. companies-Caterpillar (CAT), Ford (F), General Electric (GE), and General Motors (GM) – have announced plans to shift production back to the U.S. thanks to cheaper energy outlook at home. Boston Consulting Group data cited by Goldman predicts that by 2020 the re-shoring trend will add 2.5 million to 5 million jobs and as much as $55 billion in output to the domestic economy.
www.sthree.com | SThree plc 91 AMERICAN HISTORY 2006 2010
2010 2010 2013
www.sthree.com | SThree plc 92 AMERICAN HISTORY
USA TOTAL GP
£19.6 m
£14.6 m CAGR 32%
£9.9 m
£5.6 m £4.9 m £3.4 m
2008 2009 2010 2011 2012 2013
* USA Only reported at constant currency rates www.sthree.com | SThree plc 93 STHREE USA GROWTH – 5 POINT PLAN • Regional Growth
• A • Sectors
• Contract
• Organic Growth/M&A
• Infrastructure for growth
www.sthree.com | SThree plc 94 GROWTH OPPORTUNITIES
www.sthree.com | SThree plc 95 STHREE USA GROWTH – 5 POINT PLAN • Regional Growth • Sectors
• Contract
• Organic Growth/M&A
• Infrastructure for growth
www.sthree.com | SThree plc 96 SECTORS
Banking & Life Finance Life Banking & Sciences 20% Sciences Finance 30% 37% 36% 2008 GP 2013 GP 2018 GP Mix % Mix % MIX %
IT Energy Banking & 15% 35% Finance Energy 100% IT 26% 1%
www.sthree.com | SThree plc 97 STHREE USA GROWTH – 5 POINT PLAN • Regional Growth
• Sectors • Contract
• Organic Growth/M&A
• Infrastructure for growth
www.sthree.com | SThree plc 98 CONTRACT
PERM 25%
CONTRACT 2008 GP 2013 GP 48% PERM 2018 GP Mix % 52% Mix % Mix %
CONTRACT 75% PERM 100%
Contract grows as a share of the business
www.sthree.com | SThree plc 99 CONTRACT
Weekly Gross Profit
135% CAGR since 2009
Launch Of ECM
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2
2009 2010 2011 2012 2013 2014
www.sthree.com | SThree plc 100 STHREE USA GROWTH – 5 POINT PLAN • Regional Growth
• Sectors
• Contract
• Organic Growth/M&A
• Infrastructure for growth
www.sthree.com | SThree plc 101 ORGANIC GROWTH
San Francisco opens in 2010
Local talent acquired and developed within the HUB
Talent matures and opens up opportunity for organic growth
www.sthree.com | SThree plc 102 STHREE USA GROWTH – 5 POINT PLAN • Regional Growth
• Sectors
• Contract
• Organic Growth/M&A
• Infrastructure for growth
www.sthree.com | SThree plc 103 INFASTRUCTURE FOR GROWTH- SUPPORT SERVICES
www.sthree.com | SThree plc 104 INFRASTRUCTURE FOR GROWTH
PEOPLE – Headcount up 50% YOY
PROPERTY – Doubled the office footprint in San Francisco and Houston
PRODUCTIVITY – Best in class productivity
PROFIT – All USA locations profit making
www.sthree.com | SThree plc 105 THE FUTURE Largest Tech staffing Firms in the US Ranked by estimated 2012 US temporary staffing revenue
RANK COMPANY 2012 US STAFFING REVENUE ($ MILLION) MARKET SHARE
1 TEKsystems (Allegis Group $2,823 12%
2 On Assignment* $1,083 5%
3 Ranstad Technologies $1,062 5%
4 Experis (ManpowerGroup) $875 4%
5 Volt Information Sciences $767 3%
6 Insight Global $746 3%
7 Kforce $710 3% 8 Adecco $700 3% 2013 9 Recruit $420 2% 10 Colllabera $389 2% SThree USA 11 Robert Half International $350 2%
12 Artech Information Systems $339 1% revenue 13 CDI $293 1% $95m 14 The Judge Group $257 1%
15 Kelly Services $249 1%
16 Digital Intelligence Systems (DISYS) $234 1%
17 Strategic Staffing Solutions $215 1%
18 Computer Task Group $210 1%
19 Eliassen Group $169 1%
20 Genesis10 $168 1%
21 Rose International $166 1%
22 Matrix Resources $154 1%
23 Signature Consultants $146 1%
23 Veritude $146 1%
25 Yoh $141 1%
26 Princeton Information $140 1%
26 VisionIT $140 1%
28 Pinnacle Technical Resources $134 1%
29 Mitchell Martin $132 1%
30 Tekmark Global Solutions $120 1%
31 Pyramid Consulting $102 <1%
32 Act-1 Group $100 <1%
TOTAL $13,680 60%
Source: SIA report www.sthree.com | SThree plc 106
CONCLUSION • We are at the end of the beginning • Regional growth opportunity is huge • Sector expansion opportunity is vast • Scale of contract opportunity is unprecedented • Infrastructure for growth is in place • We believe we will be a major player in the US specialist staffing sector
THE USA IS OUR LAND OF OPPORTUNITY
www.sthree.com | SThree plc 107 LIFE SCIENCES SECTOR OVERVIEW
A MARKET LEADING OPPORTUNITY
www.sthree.com | SThree plc 108 OUR AMBITION & STRATEGY “TO BECOME THE WORLD’S MOST PROFITABLE SPECIALIST STAFFING BRAND IN THE LIFE SCIENCES SECTOR”
www.sthree.com | SThree plc 109 AGENDA
1 THE STORY SO FAR
2 MARKET OPPORTUNITY
3 OUR AMBITION & STRATEGY
4 WHERE COULD WE GO?
www.sthree.com | SThree plc 110 THE STORY SO FAR • Set up in 2006 • Now SThree’s second largest sector
www.sthree.com | SThree plc 111 LIFE SCIENCES
Other Other Other 4% 3% Life Sciences 2% 1%
ENG Life 7% Sciences 15% Life Sciences IT 20% 32%
IT Banking & 43% Finance 2008 ENG 12% 2013 2018 16% % of GP % of GP % of GP ENG 10%
IT Energy Banking & 71% 12% Finance 12% Banking Energy & Finance 25% 15%
www.sthree.com | SThree plc 112 THE STORY SO FAR • Set up in 2006
• Now SThree’s second largest sector
• Business mix with contract growing faster than perm
www.sthree.com | SThree plc 113 LIFE SCIENCES
CONTRACT 60% CONTRACT 30% CONTRACT 51%
2008 % 2013 % PERM PERM 49% 2018 % 40% of GP of GP of GP
PERM 70%
www.sthree.com | SThree plc 114 THE STORY SO FAR • Set up in 2006
• Now SThree’s second largest sector
• Global footprint established
www.sthree.com | SThree plc 115 LIFE SCIENCES
EUROPE AMERICAS 32% 27%
2013% 2008% EUROPE of GP 53% of GP
UK&I UK&I 68% 16%
APAC & ME 4%
www.sthree.com | SThree plc 116 THE STORY SO FAR • Set up in 2006
• Now SThree’s second largest sector
• Global footprint established
Offices in every continent
www.sthree.com | SThree plc 117 GLOBAL FOOTPRINT
www.sthree.com | SThree plc 118 THE STORY SO FAR • Set up in 2006
• Now SThree’s second largest sector
• Global footprint established
- Success in worlds largest marketplace
• Penetration of global client base
www.sthree.com | SThree plc 119 PENETRATION OF GLOBAL CLIENT BASE
70%
£11m GLOBAL LIFE SCIENCES NEW BUSINESS WRITTEN WITH TOP 10 CLIENTS*
*Rolling 12 months to May www.sthree.com | SThree plc 120 THE STORY SO FAR • Set up in 2009 • Now SThree’s fastest growing sector
• Global footprint established
- Success in worlds largest marketplace
• Penetration key client base
• This has resulted in 45% CAGR from 2008 to 2013
www.sthree.com | SThree plc 121 45% CAGR
Life Sciences GP 2008 2013 2014 2018 (GBP millions)
GP – H1 0.4 12.4 17.2 ?
GP – FY 1.0 28.9 ? ?
9
CAGR 45% GBP MILLION GBP
www.sthree.com | SThree plc 122 MARKET OPPORTUNITY
• Compliance driven growth
• Huge scope for expansion into complementary markets
• Gap in the Competitor Landscape - On Assignment in the USA - Hays in Europe and Asia but not dominant
• No global leader
• Real opportunity for Real Staffing brand to be the World No 1
www.sthree.com | SThree plc 123 MARKET OPPORTUNITY
• The FDA regulates all these areas
• We only cover Drugs, Vaccines and Med Devices
• Huge potential to cross into complementary compliance driven markets
www.sthree.com | SThree plc 124 OUR AMBITION & STRATEGY
• Deliver productive and profitable growth by:
• Dominating in core regions USA, DACH, JAPAN, UK
• Delivering full range of staffing services
• Expanding offering into the complete Life Sciences
www.sthree.com | SThree plc 125 WHERE COULD WE GO?
www.sthree.com | SThree plc 126 CONCLUSION • Real can become the Market Leader in Life Sciences specialist staffing • Life Sciences offers scale, profitable growth and a less competitive path • Track record of success with infrastructure in place for growth
BUY INTO TOMORROW’S MARKET LEADER TODAY
www.sthree.com | SThree plc 127