REG-SThree SThree: FY19 Trading Update

SThreeAnnouncement

12/12/2019 07:05

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   SThree (STHR)
   SThree: FY19 Trading Update
   12-Dec-2019 / 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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   12 December 2019

                                        

                                   SThree plc

                              FY19 Trading Update

                                        

          Strong performance driving record adjusted profit before tax

    

   SThree plc  ("SThree" or  the "Group"),  the global  pure-play  specialist
   staffing business focused on roles in Science, Technology, Engineering and
   Mathematics ('STEM'), is  pleased to  issue a trading  update(1)  for  the
   financial year ended 30 November 2019.

    

   Highlights

    

     • Net fees for the full year grew by 5%

          ◦ Strong growth in USA, Continental Europe and APAC & MENA
          ◦ Robust growth across Technology, Life Sciences, Engineering and
            Energy
          ◦ 86% of Group net fees generated from international(2) markets
            (2018: 83%)
          ◦ Strong growth in Contract net fees up 8%, in line with our
            strategy, now representing 74% of Group net fees (2018: 72%)
          ◦ Permanent net fees down 3%

     • Adjusted profit before tax  for the year expected  to be in line  with
       market consensus(3) and an all-time  record for the Group
     • Net cash of £11m at 30 November 2019, ahead of market consensus

    

    

   Mark Dorman, Chief Executive, commented:

    

   "As the only global,  pure-play STEM specialist,  SThree has continued  to
   deliver year-on-year growth materially ahead of the wider market. This  is
   driven by our robust performance across all of our international  regions,
   which constitute  the  majority of  the  Group, and  supportive  long-term
   market dynamics with the well documented growth in both STEM and  flexible
   working (Contract), giving us confidence  in our delivery. Our  deliberate
   focus on Contract, a natural function of our STEM specialism, continues to
   be a  strong driver  of  Group performance  and  remains a  key  strategic
   priority for the Group.

    

   "Looking ahead is difficult  at the best  of times and  even more so  now,
   given  the   significant  macro   market  and   political   uncertainties.
   Notwithstanding this, I am pleased that in our key growth markets, the new
   financial year  has started  well  with good  demand,  and this  gives  us
   confidence  that  we  will  continue  to  outperform  materially  in   our
   international markets.(4)

    

   "Our business north star is our purpose: bringing skilled people  together
   to build the future, and  we remain committed to  our vision of being  the
   number one STEM talent provider in the best STEM markets. We are confident
   that we are in the  right STEM markets; with  the size of the  opportunity
   ahead of us and  with our scalable  operational capabilities globally,  we
   are confident in our ability to deliver growth. Whilst we remain cognisant
   of the macro  uncertainties, we remain  confident that we  have the  right
   vision, niche focus, platform and teams  to outperform as we are  uniquely
   positioned as the only global pure-play STEM specialist."

    

    

    

   Financial Highlights                                                      
                                        FY 2019    Q4    Q3    Q2    Q1      
                                                  2019  2019  2019  2019
   Net Fees             FY 2019 FY 2018  YoY %    YoY % YoY % YoY % YoY %    
                                                                             
   Contract             £254.4m £232.1m   +8%      +3%   +7%  +13%  +12%     
   Permanent            £87.8m  £89.0m    -3%      -4%   -5%   -2%   +1%     
   Group                £342.2m £321.1m   +5%      +1%   +4%   +9%   +9%     
                                                                             
   Continental Europe   £196.7m £183.4m   +8%      +1%   +5%  +14%  +12%     
   USA                  £76.7m  £66.6m    +9%      +6%   +5%  +10%  +17%     
   UK&I                 £48.1m  £53.1m    -9%     -11%   -7%  -12%   -7%     
   Asia Pac & Middle    £20.7m  £18.0m   +12%      +8%  +14%  +20%   +5%     
   East
   Group                £342.2m £321.1m   +5%      +1%   +4%   +9%   +9%     
                                                                             
   Technology           £152.6m £142.0m   +7%      +1%   +8%  +12%  +10%     
   Life Sciences        £67.8m  £63.1m    +5%      +6%   +2%   +8%   +3%     
   Banking & Finance    £37.9m  £42.5m   -13%     -20%  -12%  -13%   -3%     
   Energy               £39.1m  £33.4m   +16%      +6%   +8%  +29%  +25%     
   Engineering          £34.8m  £30.6m   +11%     +13%   +6%   +9%  +19%     
   Other(5)             £10.0m   £9.5m    +3%      -3%   +5%   -3%  +11%     
   Group                £342.2m £321.1m   +5%      +1%   +4%   +9%   +9%     
                                                                             
                                                                             
                                                                             
                                                                             

    

   Business performance

    

   Group net  fees  for the  year  were up  5%  with growth  across  all  our
   international markets, up 8%. We have made management changes in the  UK&I
   in  Q4   to  positively   impact   performance,  against   a   challenging
   macro-economic and political backdrop.

    

   Contract net fees were  up 8%, with growth  across all sectors apart  from
   Banking & Finance. Contract growth was driven by Continental Europe, which
   was up 11% largely due to Technology  and the USA up 17% driven by  Energy
   and Life Sciences. Continental Europe  and USA combined now represent  81%
   of our Contract net fees (2018: 78%).

    

   Permanent net fees, which represent 26% of the business, were down 3%  for
   the year. Our largest  Permanent market, DACH(6), saw  good growth of  5%,
   with Continental Europe  remaining flat.  APAC &  MENA saw  growth of  16%
   driven by excellent performance  in Japan. Net fees  in the USA were  down
   11% year on year, reflecting previously reported leadership and  strategic
   changes made in 2018 and the UK&I was down 18%.

    

   Group period end sales headcount was up  6%, with Contract up 7%, in  line
   with the Group's strategy, and  Permanent up 2%. Contract represented  70%
   of total sales headcount  at the period end.   Sequentially vs Q3,  period
   end Group sales headcount was up 1%. Average Group sales headcount for the
   year was up 7% with Continental Europe up 8% and USA up 11%.

    

    

   Balance sheet

    

   SThree remains  in  a strong  financial  position,  with net  cash  at  30
   November 2019 of circa  £11m (30 November 2018:  Net debt £4m). The  Group
   has a £50m revolving credit facility ("RCF") with HSBC and Citibank, which
   is committed to 2023.

    

    

   Analyst conference call

    

   SThree is  hosting an  analyst  conference call  today  at 0830  GMT.  The
   details are as follows:

    

   Telephone number: 0800 358 9473

   For access to the call please enter PIN: 23994224#

    

   A replay facility will be available for 90 days on 0800 358 2049 Passcode:
   301306355#

                 

   The Group will issue its results for the financial year ended 30 November
   2019 on 27 January 2020

    

    

   (1) All  year-on-year  financial growth  rates  in this  announcement  are
   expressed at constant currency

   (2) International represents our businesses outside the UK and Ireland

   (3) Market expectations for adjusted profit before tax for the year  ended
   30 November 2019 are in the range of £56.0m to £60.9m, with a consensus of
   £58.5m

   (4) Staffing Industry Analysts market forecasts for 2019

   (5) Other includes Procurement & Supply Chain and Sales & Marketing

   (6) DACH - Germany, Austria and Switzerland

    

    

                                    - Ends -

    

     

    Enquiries:

                                                            

    
    SThree plc                           020 7268 6000
    Mark Dorman, Chief Executive Officer  
    Alex Smith, Chief Financial Officer   
    Steve Hornbuckle, Company Secretary
                                          
    
                                         020 3405 0205
    Alma PR
                                          
    Rebecca Sanders-Hewett

    Hilary Buchanan                      SThree@almapr.co.uk

    

    

   Notes to editors

    

   SThree is  a  leading  international STEM  specialist  staffing  business,
   providing permanent and contract specialist staff to a diverse client base
   of over 9,000 clients.

    

   The Group's operations  cover the Technology,  Banking & Finance,  Energy,
   Engineering and Life  Sciences sectors. With  a multi-brand strategy,  the
   Group establishes new operations  to address growth opportunities.  SThree
   brands include Computer  Futures, Huxley Associates,  Progressive and  The
   Real Staffing  Group.  The  Group  has  a network  of  47  offices  in  16
   countries, of which  40 are  in our international(2)  markets, with  circa
   3,200 employees.

    

   SThree plc is  quoted on  the Official List  of the  UK Listing  Authority
   under the ticker symbol  STEM 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.:  34924
   EQS News ID:   934103


    
   End of Announcement EQS News Service

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