REG-SThree Half Year Trading Update <Origin Href="QuoteRef">STHR.L</Origin>
16/06/2017 07:05
============
SThree (STHR)
Half Year Trading Update
16-Jun-2017 / 07:00 GMT/BST
Dissemination of a Regulatory Announcement that contains inside
information according to REGULATION (EU) No 596/2014 (MAR), transmitted by
EQS Group.
The issuer is solely responsible for the content of this announcement.
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16 June 2017
Half Year Trading Update
SThree plc ("SThree" or the "Group"), the international STEM specialist
staffing business, is today issuing a trading update for the half year
ended 31 May 2017.
Highlights
- Group gross profit ("GP") up 2%* YoY with acceleration in Q2 when Group
GP grew by 4%*
- Strong growth in USA up 16%* YoY
- Good performance in Continental Europe up 7%* YoY
- Continued robust growth in Life Sciences up 6%* YoY
- UK&I performance as expected adversely impacted by the decision of the
UK to leave the EU and Public Sector reforms, with GP down 16%* YoY
- 80% of Group GP generated outside the UK (H1 2016: 73%)
- Contract GP up 8%* YoY, with strong growth across Engineering up 17%*,
Life Sciences up 15%* and Energy up 9%*
- Permanent GP down 10%* YoY, with Permanent productivity up 8%*
- Group period-end sales headcount up 1% on the 2016 year-end position,
but down 4% YoY.
*at constant currency
Gary Elden, Chief Executive, commented:
"We are encouraged by the improvement in momentum across the business in
the period, particularly the strong performances in Continental Europe and
the USA, which is now our second largest region.
"Our Contract business continues to deliver good growth across almost all
regions, with Continental Europe and the USA again being the highlights.
"'Our Permanent business benefited from a further improvement in
productivity, driven by the particularly strong performance in USA.
Further productivity gains remain the priority for our Permanent business
in 2017.
"Looking ahead, the continued momentum of our Contract business and
improved Permanent yields give us a solid base from which to grow in a
macro-economic environment which remains uncertain."
┌────────────────────────────────┬─────────┬─────────┬─────────┬─────────┐
│ Financial Highlights - │ │ │ │ │
├────────────────────────────────┼─────────┼─────────┼─────────┼─────────┤
│ Group Gross Profit │ │ │ │ │
├──────────────────────┬─────────┼─────────┼─────────┼─────────┼─────────┤
│ │ │ │ H1 2017 │ Q2 2017 │ Q1 2017 │
├──────────────────────┼─────────┼─────────┼─────────┼─────────┼─────────┤
│ Gross Profit │ H1 2017 │ H1 2016 │ YoY % 1 │ YoY % 1 │ YoY % 1 │
├──────────────────────┼─────────┼─────────┼─────────┼─────────┼─────────┤
│ │ │ │ │ │ │
├──────────────────────┼─────────┼─────────┼─────────┼─────────┼─────────┤
│ Contract │ £94.2m │ £79.7m │ +8% │ +9% │ +7% │
├──────────────────────┼─────────┼─────────┼─────────┼─────────┼─────────┤
│ Permanent │ £40.1m │ £40.1m │ -10% │ -6% │ -14% │
├──────────────────────┼─────────┼─────────┼─────────┼─────────┼─────────┤
│ Group │ £134.3m │ £119.8m │ +2% │ +4% │ - │
├──────────────────────┼─────────┼─────────┼─────────┼─────────┼─────────┤
│ │ │ │ │ │ │
├──────────────────────┼─────────┼─────────┼─────────┼─────────┼─────────┤
│ UK&I │ £27.0m │ £32.1m │ -16% │ -14% │ -19% │
├──────────────────────┼─────────┼─────────┼─────────┼─────────┼─────────┤
│ Continental Europe │ £69.0m │ £57.9m │ +7% │ +7% │ +7% │
├──────────────────────┼─────────┼─────────┼─────────┼─────────┼─────────┤
│ USA │ £29.7m │ £22.1m │ +16% │ +20% │ +12% │
├──────────────────────┼─────────┼─────────┼─────────┼─────────┼─────────┤
│ Asia Pac & Middle │ £8.6m │ £7.7m │ -4% │ +5% │ -14% │
│ East │ │ │ │ │ │
├──────────────────────┼─────────┼─────────┼─────────┼─────────┼─────────┤
│ Group │ £134.3m │ £119.8m │ +2% │ +4% │ - │
├──────────────────────┼─────────┼─────────┼─────────┼─────────┼─────────┤
│ │ │ │ │ │ │
├──────────────────────┼─────────┼─────────┼─────────┼─────────┼─────────┤
│ ICT │ £59.7m │ £54.2m │ +1% │ +1% │ +2% │
├──────────────────────┼─────────┼─────────┼─────────┼─────────┼─────────┤
│ Banking & Finance │ £20.5m │ £19.5m │ -5% │ -1% │ -8% │
├──────────────────────┼─────────┼─────────┼─────────┼─────────┼─────────┤
│ Energy │ £11.3m │ £9.4m │ +7% │ +23% │ -8% │
│ Engineering │ £11.8m │ £10.7m │ +1% │ +3% │ -1% │
│ Life Sciences │ £28.8m │ £24.1m │ +6% │ +7% │ +4% │
├──────────────────────┼─────────┼─────────┼─────────┼─────────┼─────────┤
│ Other 3 │ £2.2m │ £1.9m │ +9% │ +13% │ +4% │
├──────────────────────┼─────────┼─────────┼─────────┼─────────┼─────────┤
│ Group │ £134.3m │ £119.8m │ +2% │ +4% │ - │
├──────────────────────┼─────────┼─────────┼─────────┼─────────┼─────────┤
│ │ │ │ │ │ │
├──────────────────────┼─────────┼─────────┼─────────┼─────────┼─────────┤
│ Contract / Perm │ │ │ │ │ │
│ Split │ │ │ │ │ │
├──────────────────────┼─────────┼─────────┼─────────┼─────────┼─────────┤
│ Contract │ 70% │ 67% │ │ │ │
├──────────────────────┼─────────┼─────────┼─────────┼─────────┼─────────┤
│ Permanent │ 30% │ 33% │ │ │ │
├──────────────────────┼─────────┼─────────┼─────────┼─────────┼─────────┤
│ │ 100% │ 100% │ │ │ │
├──────────────────────┼─────────┼─────────┼─────────┼─────────┼─────────┤
│ │ │ │ │ │ │
├──────────────────────┼─────────┼─────────┼─────────┼─────────┼─────────┤
│ Geographical Split │ │ │ │ │ │
├──────────────────────┼─────────┼─────────┼─────────┼─────────┼─────────┤
│ UK&I │ 20% │ 27% │ │ │ │
├──────────────────────┼─────────┼─────────┼─────────┼─────────┼─────────┤
│ Continental Europe │ 51% │ 48% │ │ │ │
├──────────────────────┼─────────┼─────────┼─────────┼─────────┼─────────┤
│ USA │ 22% │ 19% │ │ │ │
├──────────────────────┼─────────┼─────────┼─────────┼─────────┼─────────┤
│ Asia Pac & Middle │ 7% │ 6% │ │ │ │
│ East │ │ │ │ │ │
├──────────────────────┼─────────┼─────────┼─────────┼─────────┼─────────┤
│ │ 100% │ 100% │ │ │ │
├──────────────────────┼─────────┼─────────┼─────────┼─────────┼─────────┤
│ │ │ │ │ │ │
├──────────────────────┼─────────┼─────────┼─────────┼─────────┼─────────┤
│ Sector Split │ │ │ │ │ │
├──────────────────────┼─────────┼─────────┼─────────┼─────────┼─────────┤
│ ICT │ 44% │ 45% │ │ │ │
│ Banking & Finance │ 15% │ 16% │ │ │ │
│ Energy │ 9% │ 8% │ │ │ │
│ Engineering │ 9% │ 9% │ │ │ │
├──────────────────────┼─────────┼─────────┼─────────┼─────────┼─────────┤
│ Life Sciences │ 21% │ 20% │ │ │ │
├──────────────────────┼─────────┼─────────┼─────────┼─────────┼─────────┤
│ Other 3 │ 2% │ 2% │ │ │ │
├──────────────────────┼─────────┼─────────┼─────────┼─────────┼─────────┤
│ │ 100% │ 100% │ │ │ │
├──────────────────────┼─────────┼─────────┼─────────┼─────────┼─────────┤
│ │ │ │ │ │ │
├──────────────────────┼─────────┼─────────┼─────────┼─────────┼─────────┤
│ │ │ │ │ │ │
├──────────────────────┼─────────┼─────────┼─────────┼─────────┼─────────┤
│ │ │ │ H1 2017 │ Q2 2017 │ Q1 2017 │
├──────────────────────┼─────────┼─────────┼─────────┼─────────┼─────────┤
│ Operating Metrics │ H1 2017 │ H1 2016 │ YoY % │ YoY % │ YoY % │
├──────────────────────┼─────────┼─────────┼─────────┼─────────┼─────────┤
│ │ │ │ │ │ │
├──────────────────────┼─────────┼─────────┼─────────┼─────────┼─────────┤
│ Contract Runners 2 │ │ │ │ │ │
├──────────────────────┼─────────┼─────────┼─────────┼─────────┼─────────┤
│ UK&I │ 2,515 │ 2,680 │ -6% │ -6% │ -8% │
├──────────────────────┼─────────┼─────────┼─────────┼─────────┼─────────┤
│ Continental Europe │ 4,698 │ 3,948 │ +19% │ +19% │ +19% │
├──────────────────────┼─────────┼─────────┼─────────┼─────────┼─────────┤
│ USA │ 1,549 │ 1,262 │ +23% │ +23% │ +14% │
├──────────────────────┼─────────┼─────────┼─────────┼─────────┼─────────┤
│ Asia Pac & Middle │ 487 │ 391 │ +25% │ +25% │ +19% │
│ East │ │ │ │ │ │
├──────────────────────┼─────────┼─────────┼─────────┼─────────┼─────────┤
│ Group │ 9,249 │ 8,281 │ +12% │ +12% │ +9% │
├──────────────────────┼─────────┼─────────┼─────────┼─────────┼─────────┤
│ │ │ │ │ │ │
├──────────────────────┼─────────┼─────────┼─────────┼─────────┼─────────┤
│ │ │ │ │ │ │
├──────────────────────┴─────────┼─────────┼─────────┼─────────┼─────────┤
│ 1 At constant currency │ │ │ │ │
├────────────────────────────────┴─────────┴─────────┴─────────┴─────────┤
│ 2 Period end number of contractors onsite with clients │
├────────────────────────────────────────────────────────────────────────┤
│ 3 Other Sectors include Procurement & Supply Chain and Sales and │
│ Marketing │
└────────────────────────────────────────────────────────────────────────┘
Group gross profit ("GP") increased by 2%* YoY, with Q2 up 4%* after a
flat performance in Q1.
US GP was ahead by 16%* in the first half, making it our second largest
region for the first time, as the restructuring measures implemented in H2
2016 took effect. While the headline growth rate in H1 was boosted by a
number of one-off factors, we are encouraged by the continued recovery in
the region.
Contract continues to deliver a pleasing performance with GP up 8%* YoY
and Q2 2017 up 9%* against a strong comparative of +10%* in Q2 2016. A
large proportion of the growth in Contract at the half year was driven by
Continental Europe, up 16%* and USA up 17%*.
Permanent GP was down 10%* YoY, with average sales headcount down 17%. At
the half year, UK&I Permanent GP was down 25%*, Continental Europe was
down 9%*, offset by USA strongly up 14%*. Permanent GP was down 6%* in Q2
with UK&I down 11%* and Continental Europe down 8%*, offset by strong
performance in USA, up 13%*. Permanent productivity improved by 10%* YoY
in Q2, driven by UK&I up 14%* and USA up 36%*.
Overall, period end sales headcount was down 4% YoY, with Permanent down
12% and Contract up 2%.
Average Group sales headcount is down 7% YoY. UK&I sales headcount was
down 17%, Continental Europe was up 6% and USA down 20%. Contract sales
headcount represented 64% of total sales headcount at period end (2016:
61%).
The Group has a network of 37 offices in 15 countries, of which 31 are
outside the UK. The Group generated 80% of Gross Profit for the period
from markets outside the UK&I (2016: 73%).
SThree remains in a strong financial position. Net Cash at 31 May 2017 was
circa £5m (31 May 2016: Net Debt of £4.2m). The Group has a £50m revolving
credit facility ("RCF") with RBS and HSBC, which is committed to 2019.
*at constant currency
SThree is hosting an analyst conference call today at 0830 BST. The
details are as follows:
Telephone number: +44 (0) 20 3003 2666 or 0808 109 0700
For access to the call please quote passcode SThree
A replay facility will be available for seven days on +44 (0) 20 8196 1998
/ Access Pin: 9192006#
The Group will issue its interim results for the six months ended 31 May
2017 on 24 July 2017.
- Ends -
Enquiries:
SThree plc 020 7268 6000
Gary Elden, Chief Executive Officer
Alex Smith, Chief Financial Officer
Sarah Anderson, Deputy Company Secretary/IR Enquiries
Citigate Dewe Rogerson 020 7638 9571
Kevin Smith/Jos Bieneman
Notes to editors
SThree is a leading international specialist staffing business, providing
permanent and contract specialist staff to a diverse client base of over
7,000 clients. From its well-established position as a major player in the
information and communications technology ('ICT') sector the Group has
broadened the base of its operations to include businesses serving the
Banking & Finance, Energy, Engineering and Life Sciences sectors.
Since launching its original business, Computer Futures, in 1986, the
Group has adopted a multi-brand strategy, establishing new operations to
address growth opportunities. SThree brands include Computer Futures,
Huxley Associates, Progressive and The Real Staffing Group. The Group has
circa 2,600 employees in eighteen countries.
SThree plc is quoted on the Official List of the UK Listing Authority
under the ticker symbol STHR and also has a US level one ADR facility,
symbol SERTY.
Important notice
Certain statements in this announcement are forward looking statements. By
their nature, forward looking statements involve a number of risks,
uncertainties or assumptions that could cause actual results or events to
differ materially from those expressed or implied by those statements.
Forward looking statements regarding past trends or activities should not
be taken as representation that such trends or activities will continue in
the future. Certain data from the announcement is sourced from unaudited
internal management information and is before any exceptional items.
Accordingly, undue reliance should not be placed on forward looking
statements.
══════════════════════════════════════════════════════════════════════════
Language: English
ISIN: GB00B0KM9T71
Category Code: TST
TIDM: STHR
LEI Code: 2138003NEBX5VRP3EX50
Sequence No.: 4310
End of Announcement EQS News Service
583453 16-Jun-2017
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