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Annual Report 2 016 ANNUAL REPORT 2 016 STEM STAFFING SPECIALISTS OVERVIEW STHREE AT A GLANCE Who We Are SThree plc is a leading international staffing company. What We Do We provide specialist The Group operates a family of ten on creating a diverse and inclusive recruitment services in the brands, each with expertise and work environment allows us to find focus on niche areas. This gives us and retain skilled people and to STEM (Science, Technology, a deep understanding of industry bring a wealth of experience to Engineering and sectors and ensures we deliver a solving workplace challenges Mathematics) industries. quality service to our clients and for our customers. candidates. Our strong emphasis Key Company Facts Key Financial Facts Countries Offices Financial Year 15 39 1 December 2015 - 30 November 2016 Sales Headcount Revenue Gross Profit 2,044 (-6%) * * £959.9m (+6% ) £258.7m (+2% ) 2015: 2,185 Total Headcount Statutory Operating Profit Adjusted Operating Profit 2,590 (-6%) £37.8m (-2%) £41.3m** (Flat**) 2015: 2,752 Contractor Runners Statutory Basic Earnings per Adjusted Basic Earnings per Share Share 9,078 (+8%) ** ** 2015: 8,412 21.2p (+2%) 23.2p (Flat ) * In constant currency ** Excludes the impact of £3.5m restructuring costs, see page 24. 2 STHREE AT A GLANCE OVERVIEW OUR VISION IS TO HAVE THE LEADING SPECIALIST STEM RECRUITMENT BRANDS IN THE MARKETS IN WHICH WE PARTICIPATE Table of Contents Overview 22 5 Year Review 80 Audit Committee Report 2 SThree at a Glance 23 Chief Financial 86 Nomination Committee 3 Our Vision Officer’s Review Report 3 Table of Contents 27 Key Performance Indicators 87 Independent Auditors’ Report 4 Our Brands, Sectors 29 Risk Management Strategy & Locations 35 Corporate Social Financial Statements 94 Financial Statements Responsibility Report Strategic Report 132 5 Year Financial Summary 6 Our Business Model Governance 8 Our Investment Case 41 Chairman’s Governance Shareholder Information 10 Our Business Strategy Overview 133 Financial Calendar 12 Chief Executive 43 Board of Directors & Secretary 134 Shareholder Information Officer’s Review 46 Directors’ Report 136 Company Information 18 Continental Europe 52 Directors’ Remuneration & Corporate Advisors 19 UK & Ireland Report 20 USA 71 Corporate Governance 21 Asia Pacific & Middle East Report OUR VISION 3 OVERVIEW OUR BRANDS, SECTORS & LOCATIONS SThree consists of a family Our customers, both candidates Within the STEM industries we of ten niche recruitment and clients, engage with SThree provide permanent and contract primarily through our four largest staff to sectors including ICT, brands, focusing on the recruitment brands: Computer Banking & Finance, Life Sciences, STEM industries (Science, Futures, Progressive Recruitment, Engineering and Energy. Technology, Engineering, Huxley and Real Staffing. and Mathematics). Our Sectors • ICT • Public Sector • Digital Marketing, Creative & Advertising • Banking • Procurement & Supply Chain • Previously hidden and • Financial Services • Change Management under-utilised talent to help • Engineering • Logistics close the diversity gap. • Life Sciences • Construction • Energy • Executive Search 4 OUR BRANDS, SECTORS & LOCATIONS OVERVIEW Our Locations BELGIUM LUXEMBOURG • Antwerp • Luxembourg • Brussels City FRANCE NETHERLANDS • Paris • Amsterdam • Rotterdam GERMANY • Berlin SWITZERLAND CONTINENTAL EUROPE • Düsseldorf • Zurich • Frankfurt • Munich • Hamburg • Stuttgart UK • Bristol • Birmingham • Glasgow • London • Leeds • Manchester UK & IRELAND IRELAND • Dublin USA • Austin • Boston • Chicago • Houston • Minneapolis • New York • San Diego USA • San Francisco UAE SINGAPORE • Dubai • Singapore HONG KONG AUSTRALIA • Hong Kong • Sydney MALAYSIA JAPAN ASIA PACIFIC & MIDDLE EAST • Kuala Lumpur • Tokyo OUR BRANDS, SECTORS & LOCATIONS 5 STRATEGIC REPORT OUR BUSINESS MODEL The specialist recruitment market is primarily driven by confidence amongst candidates to move jobs, and businesses to replace them or create new roles as they grow and invest. Our business model is to create We earn fees from our clients when a virtuous circle between our we place a candidate with them. C U customers, services and people. S E T These fees are charged as a L O Our highly trained consultants P M percentage of the candidate’s O E provide skilled people into niche E R salary. With permanent roles the P roles. This allows our clients and fees are charged when the candidates to work together candidate begins work with the to build the future. client. With contractors we invoice Across our brands, our regions and clients on an ongoing basis for the sectors, Contract and Permanent, duration of the contract, with the SERVICE we operate through our key Group paying contractors and principles: retaining a portion of the amount • Build trust charged as a service fee. • Care and act • Be clear, aim high. We bring skilled people together to build the future 6 OUR BUSINESS MODEL STRATEGIC REPORT Our Customers We have three different sets of detailed market sector knowledge We match our impressive scale Customers: the client organisations and the ability to reach a vast with a strong emphasis on that we work with, contractors we network of candidates through our customer experience, to ensure place with them on a temporary own bespoke tools and by using that Clients, Contractors and basis and permanent candidates market-leading sourcing techniques. Permanent candidates receive looking for a long term career the high level of service that will For those in search of a new move. We work with almost every motivate them to deal with us in opportunity we deal with both size and shape of company in the future and to recommend us candidates and contractors, to need of skilled technical to other future customers. This find them both Permanent and specialists,from small enterprises emphasis on customer experience Contract roles. We match them through to some of the largest and has a growing importance in our to one of the tens of thousands of most respected global companies. performance management companies we work with on an practices and incentives. We are able to provide them with ad hoc or ongoing basis. the talent they need through Our Services Our Services primarily involve in addition to covering a defined One of the reasons our clients work placing people in either Contract market sector and geography. This with us is because we understand or Permanent roles and supporting allows us to offer a high level of the regulations that apply to the client companies and candidates service to customers across a wide jurisdictions where our candidates before, during and after that range of profiles and industries. work. We can ensure full process. compliance for all parties and this To ensure our strategy cascades valuable market knowledge is a Our mix of Contract and through the organisation we have source of sustainable competitive Permanent business means that targets and incentives at all levels advantage for SThree, particularly we are well placed to support our of the company to ensure that we given the long-term trend in favour clients and candidates. Our team are actively managing the size and of contract working. of consultants specialise in either performance of our Contract and Contract or Permanent recruitment, Permanent teams. Our People Our People are our greatest environment which allows them More fundamentally, our strong asset. We know that a customer’s to progress, irrespective of their sense of purpose is that we bring interaction with an individual background. We put learning and skilled people together to build the recruiter drives over 60% of their development programmes in future. This makes SThree a very total satisfaction with any place that are designed to support appealing place to build a career. transaction. their career at all stages. To support Our own efforts in this area also this, our senior team have specific allow us to provide strategic That’s why we provide them with objectives to ensure we are counsel to our clients about how the support and systems they need building and retaining a diverse they can win the war for talent to grow their career. We are and motivated workforce. in their sectors. committed to creating an inclusive OUR BUSINESS MODEL 7 STRATEGIC REPORT INVESTMENT CASE Our business model We are a STEM recruiter with We have a consistent and robust is well diversified across multiple brands to maximise dividend track record supported opportunities, including allowing by a strong balance sheet. geographies and sectors. our brands to overlap and Our entrepreneurial culture is It covers the different and compete where this creates supported by a range of long- greater shareholder value. complementary revenue term incentives to drive sustained streams of both Contract We participate in markets where performance. demand for talent exceeds and Permanent Additionally our experience over supply, giving us structural recruitment. the last 30 years gives us insight long-term growth opportunities. and flexibility to rapidly Our balanced business model re-deploy our staff across sectors provides us with a good degree of and regions in response to resilience across a range of sectors, changing market dynamics. geographies and employment Our leading edge award-winning mixes. systems and global infrastructure Our weighting towards Contract provide a scalable platform for employment makes us a safer future growth. investment. Why STEM? We specialise in the STEM • Ideal for the recruitment sector • Relatively high churn as
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