REG-SThree Q3 Trading Update <Origin Href="QuoteRef">STHR.L</Origin>
15/09/2017 07:05
============
SThree (STHR)
Q3 Trading Update
15-Sep-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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15 September 2017
Q3 Trading Update
SThree plc ("SThree" or the "Group"), the international specialist STEM
staffing business, is today issuing a trading update covering the period
from 1 June 2017 to date; financial information relates to the quarter
ended 31 August 2017.
Highlights
• Group gross profit ("GP") up 5%* YoY in Q3, with sustained momentum
from Q2 when Group GP grew by 4%*
◦ Solid growth across Engineering up 5%* YoY, Life Sciences up 3%*
and Global Energy up 35%*
◦ Strong growth in USA up 20%* YoY
◦ Robust performance in Continental Europe up 6% YoY
◦ UK&I remains challenging down 10%* YoY, in line with management
expectations
• Contract GP up 9%* YoY, with strong growth across Engineering up 10%*,
Life Sciences up 13%* and Energy up 37%*
• Permanent GP down 6%* YoY, broadly in line with average sales
headcount down 7%
• 80% of Group GP generated outside the UK&I (2016: 76%)
• Group period-end sales headcount up 3% on the 2016 year-end position,
and up 4% YoY
• Full year 2017 adjusted profit before tax expected to be ahead of
current consensus+
+ Consensus for the year ended 30 November 2017 is £42.4m, with a range of
£39.3m to £45.6m
Gary Elden, Chief Executive, commented: "We are pleased with our sustained
momentum in the period, with gross profit showing a sequential increase
over Q2. A robust performance in Continental Europe and further strong
growth in the USA were particular highlights and our Contract business is
continuing to drive growth across the Group.
"We are well-positioned for the final quarter and now expect to deliver a
full year result ahead of current consensus."
Financial Highlights -
Group Gross Profit
Q3 2017 Q2 2017 Q1 2017
Gross Profit Q3 2017 Q3 2016 YoY % 1 YoY % 1 YoY % 1
Contract £53.1m £45.4m +9% +9% +7%
Permanent £20.6m £20.6m -6% -6% -14%
Group £73.7m £66.0m +5% +4% -
UK&I £14.5m £15.8m -10% -14% -19%
Continental Europe £37.9m £32.9m +6% +7% +7%
USA £17.3m £13.5m +20% +20% +12%
Asia Pac & Middle East £4.0m £3.8m +1% +5% -14%
Group £73.7m £66.0m +5% +4% -
ICT £31.6m £29.3m +1% +1% +2%
Banking & Finance £11.3m £10.5m +1% -1% -8%
Energy £7.1m £4.8m +35% +23% -8%
Engineering £6.9m £6.2m +5% +3% -1%
Life Sciences £15.6m £14.3m +3% +7% +4%
Other Sectors 3 £1.2m £0.9m +24% +13% +4%
Group £73.7m £66.0m +5% +4% -
Contract / Perm Split
Contract 72% 69%
Permanent 28% 31%
100% 100%
Geographical Split
UK&I 20% 24%
Continental Europe 52% 50%
USA 23% 20%
Asia Pac & Middle East 5% 6%
100% 100%
Sector Split
ICT 43% 44%
Banking & Finance 15% 16%
Energy 10% 7%
Engineering 9% 10%
Life Science 21% 22%
Other Sectors 3 2% 1%
100% 100%
Q3 2017 Q2 2017 Q1 2017
Operating Metrics Q3 2017 Q3 2016 YoY % YoY % YoY %
Contract Runners 2
UK&I 2,512 2,693 -7% -6% -8%
Continental Europe 4,925 4,174 +18% +19% +19%
USA 1,631 1,316 +24% +23% +14%
Asia Pac & Middle East 489 411 +19% +25% +19%
Group 9,557 8,594 +11% +12% +9%
1 At constant currency
2 Period-end number of contractors onsite with clients
3 Other Sectors includes Procurement & Supply Chain and Sales & Marketing
Group gross profit ("GP") was up 5%* YoY and up 5%* sequentially vs Q2,
with Q2 having been up 4%* YoY after a flat performance in Q1. USA GP was
ahead by 20%* YoY in the quarter, another strong performance after being
up 20%* in Q2. Continental Europe posted a robust performance in the
quarter up 6%* YoY. Sales headcount for the Group was up 4% YoY and 3%
ahead of the 2016 year end position.
Contract continues to perform strongly, up 9%* YoY with a large proportion
of the growth in the quarter from Continental Europe up 12%* and USA up
24%*, offset by a decline in the UK&I, down 10%*. On a sector basis, the
Group maintained strong growth in Engineering up 10%* YoY and Life
Sciences up 13%*. We continued to prioritise growth in Contract sales
headcount, with an average increase in the quarter of 8% YoY.
Permanent GP was down 6%* YoY, broadly in line with average sales
headcount down 7% YoY. In the quarter, Permanent GP in UK&I declined by
12%* YoY, Continental Europe declined by 9%*, offset by a strong
performance in USA, up 12%*.
Average Group sales heads were up 2% YoY. UK&I sales headcount was down 9%
YoY, Continental Europe was up 13%, USA was down 3% and Asia Pacific &
Middle East was down 15%. Contract sales headcount represented 65% of
total sales headcount at the end of the quarter (2016: 62%).
The Group has a network of 39 offices in 16 countries, of which 32 are
outside the UK. The Group generated 80% of Gross Profit for the period
from markets outside the UK&I (2016: 76%).
SThree remains in a strong financial position. Net debt at 31 August 2017
was circa £8m (31 August 2016: £14m). The Group has a £50m revolving
credit facility ("RCF") with Citibank 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
For access to the call please quote passcode SThree
A replay facility will be available for seven days on +44 (0) 20 8196 1998
followed by 1582104#
The Group will be hosting a Capital Markets Day in London on the afternoon
of 15 November 2017.
The Group will issue a trading update for the year ended 30 November 2017
on 15 December 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 2,700 employees in sixteen 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.
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ISIN: GB00B0KM9T71
Category Code: TST
TIDM: STHR
LEI Code: 2138003NEBX5VRP3EX50
Sequence No.: 4635
End of Announcement EQS News Service
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609909 15-Sep-2017
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