REG-SThree SThree: Q1 Trading Update

SThreeAnnouncement

15/03/2019 07:00

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   SThree (STHR)
   SThree: Q1 Trading Update

   15-March-2019 / 07:00 GMT/BST
   Dissemination of a Regulatory Announcement, transmitted by EQS Group.
   The issuer is solely responsible for the content of this announcement.

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   15 March 2019

                                        

                               Q1 Trading Update

                                        

          Encouraging start to the year with good momentum in Contract

    

   SThree plc ("SThree" or the "Group"), the international specialist STEM(1)
   staffing business,  is today  issuing a  trading update(2)   covering  the
   period from 1 December 2018 to date; financial information relates to  the
   quarter ended 28 February 2019.

    

   Highlights

    

     • Encouraging start to the new financial year
     • Group gross profit ("GP") up 9% YoY (Q1 2018: up 8%)
     • 85% of Group GP generated from markets outside the UK&I (2018: 82%)
     • Growth in both Contract and Permanent GP

          ◦ Contract GP up 12%
          ◦ Permanent GP up 1%
          ◦ Contract represented 74% of Group Q1 GP (Q1 2018: 72%)

     • Group period-end sales headcount up 5% YoY
     • Continued strong balance sheet
     • Mark Dorman to join as CEO on 18 March 2019

    

   (1) STEM - Science, Technology, Engineering and Mathematics

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

   (3) DACH - Germany, Austria and Switzerland

    

    

   Gary Elden, Chief Executive, commented:

    

   "We have  made an  encouraging start  to the  year, with  robust Group  GP
   growth in what is our seasonally least significant quarter.

    

   "It is  pleasing to  see growth  in both  Contract and  Permanent, with  a
   particularly strong performance in Contract, driven by continued  progress
   in our key markets, Continental Europe and the USA.

    

   "Looking ahead,  SThree will  continue to  invest in  our teams  to  drive
   growth, consistent  with our  vision  to be  the  number one  STEM  talent
   provider in the best STEM markets. Our focus on Contract and the continued
   strength of  our  performance  across key  regions  and  sectors  provides
   resilience in today's more turbulent  market conditions. Set against  this
   context, we  remain confident  in  achieving good  growth in  the  current
   year."

    

    

   Financial Highlights -

                                 Q1      Q4    Q3    Q2   Q1
                                2019    2018  2018  2018 2018
   Gross Profit Q1 2019 Q1 2018 YoY %   YoY % YoY % YoY  YoY
                                                     %    %
                                                          
   Contract      £57.6m  £50.5m +12%    +15%  +14%  +16% +11%
   Permanent     £20.5m  £19.8m  +1%     +6%   +8%  +7%  +2%
   Group         £78.1m  £70.3m  +9%    +12%  +13%  +13% +8%
                                                          
   Continental   £45.5m  £40.3m +12%    +20%  +24%  +20% +15%
   Europe
   USA           £16.4m  £13.1m +17%     +8%   +8%  +16% +1%
   UK&I          £11.7m  £12.7m  -7%     -4%  -10%  -2%  -3%
   Asia Pac &     £4.5m   £4.2m  +5%    +13%  +16%  +1%  +15%                
   Middle East
   Group         £78.1m  £70.3m  +9%    +12%  +13%  +13% +8%
                                                          
   ICT           £34.8m  £31.8m +10%    +18%  +14%  +13% +5%
   Life          £15.8m  £14.8m  +4%     +1%  +13%  +12% +9%
   Sciences
   Banking &      £9.6m   £9.5m  -3%     +2%   -7%  +1%  -0%
   Finance
   Energy         £8.6m   £6.1m +25%    +26%  +32%  +28% +35%
   Engineering    £7.8m   £6.7m +19%    +16%  +15%  +20% +14%
   Other(4)       £1.5m   £1.4m  +8%    +24%  +33%  +25% +32%
   Group         £78.1m  £70.3m  +9%    +12%  +13%  +13% +8%

    

    

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

    

    

   Business performance

    

   Group GP for the year was up  9% with robust growth in Continental  Europe
   up 12% and  USA up 17%.  The growth  in Continental Europe  was driven  by
   Benelux and DACH(3)  up 11%  and 12% respectively.  UK&I GP  was down  7%,
   although productivity in the region  improved by 2%. ICT, Engineering  and
   Energy delivered very good growth in the period.

    

   Contract GP  was  up  12%,  with  strong  performances  across  ICT,  Life
   Sciences, Energy and Engineering, and  double digit growth in all  regions
   outside of UK&I. Continental Europe and USA combined now represent 79%  of
   our Contract GP (Q1 2018: 76%) in  line with our strategy to focus on  the
   world's biggest STEM recruitment markets.

    

   Permanent GP  was up  1%, driven  by DACH  up 7%  and Japan  up 38%,  both
   against tough comparatives. This progress was offset by USA which was down
   1%, and by UK&I which, as expected, was down 16% reflecting the previously
   reported restructuring. Permanent productivity  across the Group  improved
   by 5% over last year, as a result of the Group's strategy to focus on  the
   best performing Permanent markets.

    

   The planned relocation of the majority of our London based central support
   functions to Glasgow is now complete, with the expected benefits now being
   realised.

    

   Offices and People

    

   The Group has a  network of 44  offices in 16 countries,  of which 37  are
   outside the UK. The Group generated 85% of GP for the period from  markets
   outside the UK&I (Q1 2018: 82%).

    

   Average Group sales headcount was up 4% YoY with Continental Europe up 8%,
   USA up 4% and  UK&I down 8%.  Average sales Contract  headcount was up  8%
   which was  partially  offset  by  a  4%  reduction  in  average  Permanent
   headcount. Group sales period end headcount was up 5% YoY with Contract up
   8% and Permanent down 1%. Contract  headcount now represents 68% of  Group
   sales headcount (Q1 2018: 66%).

    

   Balance sheet

    

   SThree remains in  a strong financial  position. Net debt  at 28  February
   2019 was circa £12m (28 February 2018: Net debt £2m). The Group has a £50m
   revolving credit  facility  ("RCF")  with  HSBC  and  Citibank,  which  is
   committed to 2023.

    

   Appointment of new Chief Executive

    

   We were pleased to announce on 28 February the appointment of Mark  Dorman
   as Chief Executive Officer of the Group. Mark brings a wealth of  relevant
   experience in  scaling international  business service  operations and  he
   will join SThree on 18th March  2019. As previously announced Gary  Elden,
   current Chief Executive Officer, will be  stepping down from his role  and
   the Board on that date, and will remain with the Company until the AGM  on
   24th April 2019 in order to ensure a smooth and orderly handover.

    

   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: 41130199#

    

   A replay facility will be available for 90 days on 0800 358 2049 Passcode:
   301282034#

                 

   The Group will issue its trading update for six months ended 31st May 2019
   on 14th June 2019.

    

                                    - Ends -

    

    

    Enquiries:

                                                                             

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

    
   Alma PR                                                020 3405 0205
   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 3,000 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:  QRF
   TIDM:           STHR
   LEI Code:       2138003NEBX5VRP3EX50
   OAM Categories: 2.2. Inside information
   Sequence No.:   7825
   EQS News ID:    787801


    
   End of Announcement EQS News Service

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