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% % of GP CONTRACT 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