REG-SThree SThree:Q3 Trading Update

SThreeAnnouncement

14/09/2018 07:00

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   SThree (STHR)
   SThree:Q3 Trading Update

   14-Sep-2018 / 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 September 2018

                                        

                               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  2018 to date;  financial information relates  to the  quarter
   ended 31 August 2018.

    

   Highlights

    

     • Strong  Q3  performance  underpinned  by  specialist  focus  on   STEM
       disciplines in international markets
     • Group gross profit ("GP") up 13%* YoY in Q3
     ◦ Robust growth across ICT up  14%*, Engineering up 15%*, Life  Sciences
       up 13%* and Global Energy up 32%*
     ◦ Strong growth in  Continental Europe up  24%*, with DACH  up 21%*  and
       Benelux up 33%*
     ◦ Solid performance in USA up 8%*
     ◦ UK&I productivity up  3%*, with GP  down 10%*, following  our Q2  UK&I
       Permanent restructure
     ◦ 84% of Group GP generated outside the UK&I (2017: 80%)
     • Contract GP up 14%* YoY
     ◦ Strong growth across ICT up 12%*, Life Sciences up 8%*, Energy up 30%*
       and Engineering up 21%*
     ◦ Continental Europe up 24%* and USA up 11%*
     ◦ Contract GP now represents 73% of Group GP (2017:72%)
     • Permanent GP up 8%* YoY, with  strong growth in Continental Europe  up
       23%* and Japan more than doubled*
     • Group period-end sales headcount up 7%  YoY and up 3% versus the  half
       year position

    

   STEM - Science, Technology, Engineering and Maths

   DACH - Germany, Austria and Switzerland

    

   Gary Elden, Chief Executive, commented: "We are pleased to have  delivered
   another strong quarter, continuing the momentum  of Q2, which was also  up
   13%*.  The Group is benefiting both from the broad geographic reach of its
   operations, with 84%  of GP  now generated in  international markets,  and
   from its focus on the best STEM markets.

    

   "Continental Europe, our largest region, continued to grow strongly,  with
   both DACH and Benelux delivering record performances, and the USA posted a
   solid result against strong prior year comparatives.  We are investing  in
   growing our highest performing teams and remain on track with the delivery
   of our five-year growth strategy.

    

   "Looking ahead,  trading conditions  in the  majority of  our markets  are
   encouraging and we enter  Q4, our most  significant trading quarter,  with
   confidence in our full year prospects."   

    

    

    

   Financial Highlights -                                               
   Group Gross Profit                                                   
                                             Q3 2018 Q2 2018 Q1 2018    
   Gross Profit            Q3 2018  Q3 2017  YoY % 1 YoY % 1 YoY % 1    
                                                                        
   Contract                 £60.4m   £53.1m   +14%    +16%    +11%      
   Permanent                £22.3m   £20.6m    +8%     +7%     +2%      
   Group                    £82.7m   £73.7m   +13%    +13%     +8%      
                                                                        
   Continental Europe       £47.0m   £37.9m   +24%    +20%    +15%      
   USA                      £18.2m   £17.3m    +8%    +16%     +1%      
   UK&I                     £13.0m   £14.5m   -10%     -2%     -3%      
   Asia Pac & Middle East   £4.5m    £4.0m    +16%     +1%    +15%      
   Group                    £82.7m   £73.7m   +13%    +13%     +8%      
                                                                        
   ICT                      £35.9m   £31.6m   +14%    +13%     +5%      
   Life Sciences            £17.4m   £15.6m   +13%    +12%     +9%      
   Banking & Finance        £10.5m   £11.3m    -7%     +1%     -0%      
   Energy                   £9.3m    £7.1m    +32%    +28%    +35%      
   Engineering              £8.0m    £6.9m    +15%    +20%    +14%      
   Other 2                  £1.6m    £1.2m    +33%    +25%    +32%      
   Group                    £82.7m   £73.7m   +13%    +13%     +8%      
                                                                        
   Contract / Perm Split                                                
   Contract                  73%      72%                               
   Permanent                 27%      28%                               
                             100%     100%                              
                                                                        
   Geographical Split                                                   
   Continental Europe        57%      52%                               
   USA                       22%      23%                               
   UK&I                      16%      20%                               
   Asia Pac & Middle East     5%       5%                               
                             100%     100%                              
                                                                        
   Sector Split                                                         
   ICT                       43%      43%                               
   Life Science              21%      21%                               
   Banking & Finance         13%      15%                               
   Energy                    11%      10%                               
   Engineering               10%       9%                               
   Other 2                    2%       2%                               
                             100%     100%                              
                                                                        
   1 At constant currency                                               
   2 Other includes Procurement & Supply Chain and Sales & Marketing    
                                                                        

    

    

   Group gross profit ("GP") was up 13%* YoY, continuing the growth from Q2
   when GP was also ahead by 13%*. Continental Europe was ahead by 24%* YoY
   in Q3, as our growth accelerated, driven by record performances in DACH
   and Benelux. USA posted a solid performance in the quarter up 8%* YoY
   against strong prior year comparatives. Period end sales headcount for the
   Group was up 7% YoY and up 3% versus the half year position.

    

   Contract performed strongly, up  14%* YoY with a  large proportion of  the
   growth coming from Continental Europe which was ahead by 24%*. USA was  up
   11%* YoY, offset by a  slight decline in the UK&I,  down 3%*. On a  sector
   basis, the  Group  maintained  strong  growth across  ICT  up  12%*,  Life
   Sciences up 8%*, Energy up 30%*  and Engineering up 21%*. We continued  to
   prioritise growth in Contract sales headcount, with an average increase in
   the quarter of 11% YoY.

    

   Permanent GP  was  up  8%*  YoY  (Q2  growth  of  7%*).  Permanent  GP  in
   Continental  Europe  grew  23%*  YoY,  USA  grew  1%*  YoY  against  tough
   comparatives and Japan more than doubled*.  This progress was offset by  a
   decline in  UK&I  where  GP  was  down  by  33%*,  following  the  planned
   restructure of our  UK Permanent business  in early Q2,  which reduced  UK
   Permanent average sales  headcount by 37%  in Q3. This  action is  already
   having a  positive impact  on both  UK and  Group Permanent  productivity,
   which improved by 5%* and 11%* respectively, in the third quarter.

    

   Average Group sales heads were up  7% YoY. Continental Europe was up  15%,
   USA was  up 8%  and Asia  Pacific  & Middle  East was  up 5%.  UK&I  sales
   headcount was down 12%  YoY. Contract sales  headcount represented 68%  of
   total sales headcount at the end of the quarter (2017: 65%).

    

   The Group has a  network of 43  offices in 16 countries,  of which 37  are
   outside the UK.  The Group generated  84% of Gross  Profit for the  period
   from markets outside the UK&I (2017: 80%).

    

   The Group's  move of  its  London-based support  functions to  Glasgow  is
   progressing to plan.

    

   SThree remains in a strong financial position. Net debt at 31 August 2018
   was circa £24m (31 May 2018: £6.2m). The outflow in the quarter is as a
   result of the payment of the final dividend, planned exceptional cash
   costs relating to the Glasgow relocation and growth in working capital, in
   part due to the strong growth in our contract book. The Group has a £50m
   revolving credit facility ("RCF") with Citibank and HSBC, which is
   committed to 2023.

    

    * at constant currency

    

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

    

   Telephone number:  +44 (0) 333 300 0804

   Access Code:  21172140#

    

   For access to the call please quote passcode SThree

    

   A replay facility will be available for seven days on:

    

   UK +44 (0) 333 300 0819
   UK FREE 0800 358 2049
   US +1 (866) 931-1566
   US FREE +1 (844) 307-9361

   Access code: 301243855#

    

   The Group will issue a trading update for the year ended 30 November 2018
   on 14 December 2018.

    

                                    - Ends -

                                        

                                        

    

   Enquiries:                                           
    SThree plc                             020 7268 6000
    Gary Elden, Chief Executive Officer     
    Alex Smith, Chief Financial Officer
                                            
    Kirsty Mulholland, Company Secretariat
    
                                            
    
    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
   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 2,800 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.:  6012
   EQS News ID:   723569


    
   End of Announcement EQS News Service

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