REG-SThree SThree: Half Year Trading Update

SThreeAnnouncement

14/06/2019 07:05

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   SThree (STHR)
   SThree: Half Year Trading Update

   14-Jun-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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   14 June 2019

                                        

                                        

                            Half Year Trading Update

    

       Encouraging first half performance with good momentum in Contract

    

   SThree plc ("SThree" or the "Group"), the international STEM(1) specialist
   staffing business, is pleased to  issue  a trading update(2) for the  half
   year ended 31st May 2019.

    

   Highlights

    

     • Performance in the first half of the year in line with management
       expectations
     • Group net fees up 9% YoY, consistent across both Q1 and Q2
     • 86% of Group net fees generated from markets outside the UK&I (2018:
       82%)
     • Double digit growth in net fees in all regions outside the UK&I
     • Strong net fee growth in Contract, in line with strategic focus

          ◦ Contract up 12% YoY, with Q2 up 13%
          ◦ Contract represented 74% of Group net fees in H1 (H1 2018: 72%)

     • Permanent down 1% YoY, with Q2 down 2%
     • Group period-end sales headcount up 12% YoY

    

    

   Mark Dorman, Chief Executive, commented:

    

   "In what is my first trading update with the Group, I am pleased with  the
   performance we are  reporting today,  delivered by a  strong and  talented
   team. The benefits of our model and the structural drivers in our  markets
   are seen  throughout  our  results with  our  key  performance  indicators
   demonstrating the continued success of  our sector and regional  strategic
   focus. We are particularly  pleased to report double  digit growth in  net
   fees across three of  our four regions  and have plans  in place to  drive
   growth across them all.

    

   "The scale of the STEM opportunity is both enormous and growing across our
   key regions and we are uniquely positioned to benefit from this. With this
   backdrop, the  structural market  drivers  for STEM  recruitment  services
   remain very attractive and we continue to invest in high performing  teams
   to drive growth, in line with our vision to be the number one STEM  talent
   provider in the best STEM markets.

    

   "Our deliberate  focus  on  Contract,  a  natural  function  of  our  STEM
   specialism, and  the  continued strength  of  our performance  across  key
   regions and sectors in our well diversified portfolio, provides resilience
   in today's more uncertain market conditions, whilst also delivering strong
   growth over the medium term. Following the encouraging start to the  year,
   expectations for the full year remain unchanged."

    

    

    

    

   Financial Highlights                                      
                                          H1 2019   Q2 2019 Q1 2019
   Net fees               H1 2019 H1 2018 YoY % 2   YoY % 2 YoY % 2
                                                                
   Contract               £121.1m £106.7m  +12%      +13%    +12%
   Permanent              £41.9m  £41.7m    -1%       -2%     +1%
   Group                  £163.0m £148.4m   +9%       +9%     +9%
                                                                
   Continental Europe (3) £93.9m  £83.9m   +13%      +14%    +12%
   USA                    £35.5m  £29.5m   +13%      +10%    +17%
   UK&I                   £23.8m  £26.5m    -9%      -12%     -7%
   Asia Pac & Middle East  £9.8m   £8.5m   +13%      +20%     +5%
   Group                  £163.0m £148.4m   +9%       +9%     +9%
                                                                
   ICT                    £73.1m  £66.5m   +11%      +12%    +10%
   Life Sciences          £31.5m  £30.6m    +6%       +8%     +3%
   Banking & Finance      £18.8m  £20.1m    -9%      -13%     -3%
   Energy                 £18.4m  £14.0m   +27%      +29%    +25%
   Engineering            £16.3m  £14.3m   +14%       +9%    +19%
   Other(4)                £4.9m   £2.9m    +4%       -3%    +11%
   Group                  £163.0m £148.4m   +9%       +9%     +9%

    

    

   Business Performance

    

   Group net fees  increased by  9% YoY, consistent  across both  Q1 and  Q2.
   Performance was driven by  Continental Europe up 13%  and USA up 13%.  The
   growth in Continental Europe was driven by DACH(5) and the Netherlands  up
   15% and 11% respectively. All regions delivered double digit growth,  with
   the exception of UK&I which, whilst net fees were down 9%, is stabilising.
   Our major sectors  ICT, Life  Sciences, Energy  and Engineering  delivered
   strong growth.

    

   Contract continued to deliver  a strong performance with  net fees up  12%
   and Q2 up 13%. All regions  outside of UK&I delivered double digit  growth
   with Continental  Europe up  16%,  USA up  22% and  APAC  & MENA  up  15%.
   Continental Europe and USA combined now represent 80% of Contract net fees
   (H1 2018: 76%) in line with our  strategy to focus on the world's  biggest
   STEM contract recruitment markets.

    

   Permanent net fees were down 1% (Q2 down 2%) with UK&I net fees declining,
   reflecting the previously reported UK restructuring. The USA saw net  fees
   decline by 10%,  reflecting previously reported  leadership and  strategic
   changes made  in  H1 2018.  We  saw strong  growth  in DACH,  our  largest
   Permanent region, up 9% and  in Japan, which continues  to grow at a  very
   fast rate, up 49% YoY.  

    

   Offices and People

    

   The Group has a  network of 45  offices in 16 countries,  of which 38  are
   outside the UK. The Group  generated 86% of net  fees for the period  from
   markets outside the UK&I (2018: 82%).

   Average Group sales headcount was up 7% YoY with Continental Europe up 9%,
   USA up 8%,  Japan up  62% and UK&I  down 2%.  Average Permanent  headcount
   remained flat  and average  Contract headcount  was up  11% in  line  with
   strategy. Period end sales headcount was up 12% YoY, with Permanent up  7%
   and Contract up  15%. Contract  sales headcount represented  69% of  total
   sales headcount at period end (2018: 68%).

   Balance Sheet

   Net debt at 31st May  2019 was £8.0m (31st May  2018: Net debt of  £6.2m).
   The Group has a £50m revolving  credit facility ("RCF") with Citibank  and
   HSBC, 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: 55250260#

    

   A replay facility will be available for 90 days on 0800 358 2049 Passcode:
   301289947#

                 

   The Group will issue its interim results for the six months ended 31st May
   2019 on 22nd July 2019.

    

    

   (1) Science, Technology, Engineering & Mathematics

   (2) All  year  on  year  financial growth  %s  in  this  announcement  are
   expressed at constant currency

   (3) Continental Europe benefitted from an extra working day in Q2/H1 2019,
   as the Whit Monday holiday fell in Q2 2018

   (4) Other  includes  Creative, Procurement  &  Supply Chain  and  Sales  &
   Marketing

   (5) DACH - Germany, Austria and Switzerland

    

                                    - Ends -

    

     

    Enquiries:

                                                                             

    
    SThree plc                                            020 7268 6000
    Mark Dorman, Chief Executive Officer                   
    Alex Smith, Chief Financial Officer                    
    Kirsty Mulholland, Senior Company Secretary
   Assistant/ IR Enquiries                                 

    
                                                          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.  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 3,100 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.:  10105
   EQS News ID:   824393


    
   End of Announcement EQS News Service

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