REG-SThree SThree: Q3 Trading Update

SThreeAnnouncement

13/09/2019 07:05

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   SThree (STHR)
   SThree: Q3 Trading Update

   13-Sep-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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   13th September 2019

                                        

                                        

                                   SThree plc

                               Q3 Trading Update

    

              Robust Q3 performance with good momentum in Contract

    

   SThree  plc  ("SThree"  or  the  "Group"),  the  international  specialist
   staffing business focused on roles in Science, Technology, Engineering and
   Mathematics ('STEM'), is pleased  to issue a  trading update covering  the
   period from 1st June  2019 to date. Financial  information relates to  the
   quarter ended 31st August 2019(1).

    

   Highlights

    

     • Good Q3 performance underpinned by our specialist focus on STEM
       disciplines, Contract and international market exposure
     • Group net fees adjusted for working days up 6%(2) YoY

          ◦ Group net fees up 4% YoY

     • Good net fee growth in Contract, in line with strategic focus

          ◦ Contract up 7% YoY
          ◦ Contract increased to 75% of Group net fees in Q3 (Q3 2018: 73%)

     • Permanent net fees down 5%
     • Growth in net fees across all international markets(3)

          ◦ DACH(4) net fees up 8%, USA up 5% and Japan up 82%
          ◦ Net fees generated from international markets increased to 86%
            (2018: 84%)

     • Group period-end sales headcount up 8% YoY, with Q3 headcount down 1%
       versus Q2

    

    

   Mark Dorman, Chief Executive, commented:

    

   "The Group's  unique  and  specialised business  model  has  continued  to
   deliver year-on-year  growth in  the  third quarter,  driven by  a  strong
   performance  across  all  of  the  Group's  international  markets   which
   constitute the  majority of  the  Group. On  a like-for-like  basis  after
   adjusting for working days,  this growth shows a  6%(2) increase in  Group
   net fees.  Furthermore,  our  deliberate  focus  on  Contract,  a  natural
   function of our STEM specialism, continues  to be a strong contributor  to
   Group performance and remains a key strategic priority for the Group.    

    

   "We remain excited about the scale  of the market opportunity in front  of
   us. We continue to see strong demand across our key regions for STEM roles
   and remain committed  to our vision  of being the  number one STEM  talent
   provider in the best STEM markets.

    

   "Our robust financial position, specialised  STEM and Contract focus  with
   international  reach  provides  the  Group  with  a  well-established  and
   resilient platform as we  enter the final quarter  of the year. Whilst  we
   remain cognisant  of significant  macro  market uncertainties,  we  remain
   confident that we have the right niche focus, vision and teams to  deliver
   continued  growth,  and  our  expectations   for  the  full  year   remain
   unchanged."

    

    

    

    

   Financial Highlights(1)                                  
                                           Q3 2019 Q2 2019 Q1 2019
   Net Fees                Q3 2019 Q3 2018  YoY %   YoY %   YoY %
                                                            
   Contract                £66.0m  £60.4m    +7%    +13%    +12%
   Permanent               £21.8m  £22.3m    -5%     -2%     +1%
   Group                   £87.8m  £82.7m    +4%     +9%     +9%
                                                            
   Continental Europe      £50.1m  £47.0m    +5%    +14%    +12%
   USA                     £20.4m  £18.2m    +5%    +10%    +17%
   UK&I                    £12.1m  £13.0m    -7%    -12%     -7%
   Asia Pac & Middle East   £5.2m   £4.5m   +14%    +20%     +5%
   Group                   £87.8m  £82.7m    +4%     +9%     +9%
                                                            
   Technology              £39.4m  £35.9m    +8%    +12%    +10%
   Life Sciences           £17.7m  £17.4m    +2%     +8%     +3%
   Banking & Finance        £9.4m  £10.5m   -12%    -13%     -3%
   Energy                  £10.2m   £9.3m    +8%    +29%    +25%
   Engineering              £8.6m   £8.0m    +6%     +9%    +19%
   Other(5)                 £2.5m   £1.6m    +5%     -3%    +11%
   Group                   £87.8m  £82.7m    +4%     +9%     +9%

    

    

   Business Performance

    

   Group net fees  adjusted for working  days increased by  6%(2). Group  net
   fees increased by 4% YoY, after one less working day across the Group  and
   one additional public  holiday in  Continental Europe,  compared with  the
   prior year.  Three of  the Group's  four regions,  which account  for  86%
   (2018: 84%) of net fees, delivered good growth in the quarter.

    

   Performance was driven by  Continental Europe, up 5%  and the USA, up  5%.
   DACH continued to be  the stand out  performer within Continental  Europe,
   with net fees in the quarter up 8% YoY. This demonstrates the benefits  of
   our focus on the growing and resilient STEM market. Asia Pac & Middle East
   delivered double digit  growth of 14%  driven by a  strong performance  in
   Japan.  UK&I  net  fees   were  down  7%,   against  a  more   challenging
   macro-economic backdrop. Technology, Life Sciences, Energy and Engineering
   sectors delivered growth in the quarter.

    

   Contract delivered a good performance with  net fees up 7%. USA  continues
   its strong performance  with growth of  16%. Continental Europe  delivered
   growth of 9%  with DACH up  12%. Continental Europe  and USA combined  now
   represent 80%  of  Contract net  fees  (Q3 2018:  79%)  in line  with  our
   strategy to  focus  on  the  world's  biggest  STEM  contract  recruitment
   markets.

    

   Permanent net fees were  down 5% in Q3.  Continental Europe net fees  were
   down 4% in the quarter against  strong prior year comparatives. DACH,  our
   largest Perm  region  was  level  YoY. USA  net  fees  declined  20%  YoY,
   reflecting previously reported  leadership and strategic  changes made  in
   2018. Our Japan Permanent business continues to grow rapidly, up 84%  YoY.
    

   Period end sales headcount was up  8% YoY, with greater focus on  Contract
   up 10%. Contract sales headcount represented 69% of total sales  headcount
   at period  end (2018:  68%). Q3  headcount  was down  1% versus  Q2,  with
   sequential investment in  DACH, USA and  Japan of 4%  offset by a  managed
   reduction in our other geographies of 6%.

   Balance Sheet

   The Group continues to be highly cash generative. Net debt at 31st  August
   2019 decreased to circa £12m (31st  August 2018: Net debt of circa  £24m).
   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: 33642306#

    

   A replay facility will be available for 90 days on 0800 358 2049 Passcode:
   301298950#

                 

   The Group will host a Capital Markets Day on 21st November 2019.

    

   The Group will issue a trading update for the year ended 30th November
   2019 on 13th December 2019.

    

    

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

   (2) In Q3, the Group was impacted by one less working day and  Continental
   Europe had one more public holiday, as the Whit Monday holiday fell in  Q3
   2019 (Whit Monday was in Q2  in 2018). The adjusted growth normalises  for
   this impact on our Contract business. We have only adjusted for this where
   explicitly indicated.

   (3) Denotes markets other than UK&I

   (4) DACH - Germany, Austria and Switzerland

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

    

                                    - 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.

    

   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  46  offices  in  16
   countries, of which 39 are outside the UK, with

   circa 3,100 employees.

    

   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: QRT
   TIDM:          STHR
   LEI Code:      2138003NEBX5VRP3EX50
   Sequence No.:  19944
   EQS News ID:   872961


    
   End of Announcement EQS News Service

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