REG-SThree SThree: FY 2022 Trading Update

SThreeAnnouncement

14/12/2022 07:15

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   SThree (STEM)
   SThree: FY 2022 Trading Update

   14-Dec-2022 / 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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   14 December 2022

                                        

                                        

                                   SThree plc

                                        

                             FY 2022 Trading Update

                                        

      Record performance for the year with double-digit growth across all
                                    regions

    

   SThree plc (‘SThree’ or  the ‘Group’), the  only global specialist  talent
   partner  focused  on  roles   in  Science,  Technology,  Engineering   and
   Mathematics (‘STEM’),  is  pleased  to  issue a  trading  update  for  the
   financial year ended 30 November 2022.

    

   Highlights

     • Group net  fees  for  the full  year  up  19% YoY(1),  driven  by  the
       execution of our strategy and demand for STEM skills
     • Our three largest countries represent 73% of Group net fees (FY  2021:
       74%): Germany up 14%, USA up 13% and Netherlands up 34% YoY
     • Strong growth across Technology, up 23% and Engineering, up 27%,  with
       Life Sciences continuing to grow 6%  against a very strong prior  year
       comparator
     • In line with our strategic focus on flexible talent, Contract net fees
       up 23%; Permanent net fees up 6%
     • Contract net fees represent 78% of Group net fees (FY 2021: 75%)
     • Strong  contractor  order  book(2)   up  19%  YoY,  providing   strong
       visibility
     • Productivity(3) up 7% YoY, reflecting continued strong net fee  growth
       and the quality of our staff and internal recruitment strategy
     • Robust balance sheet, with  £65m net cash as  at 30 November 2022  (30
       November 2021: £58m)

    

    
   Timo Lehne, Chief Executive, commented:

    

   “We have  delivered  an  exceptional performance  throughout  the  period,
   materially ahead of initial expectations with full year net fee growth  of
   19% year  on year.  After my  first  year as  CEO, it  is clear  that  our
   well-established strategy, focused on STEM and flexible talent, puts us in
   a unique position to win.

    

   “During the year we  continued to make progress  in the implementation  of
   our strategy with  targeted investment in  our people, talent  acquisition
   and digital infrastructure moving forward  as planned. This investment  is
   designed to reinforce our long-term  sustainable growth, with most of  the
   year’s costs incurred in the second half as planned.

    

   “Towards the  end  of  the  year  we  started  to  see  a  softer  trading
   environment, reflecting the  uncertain macro-economic  conditions, and  we
   continue to monitor the trends  across our regions. However, the  strength
   of our contract order  book, robust balance sheet  and a diverse  customer
   base underpins our business. Our well-established strategy focused on STEM
   skills and flexible talent is supported by global megatrends,  reaffirming
   our belief  that we  have the  right vision  with a  unique and  resilient
   business model for the mid to long-term.”

    
    

    

                     FY       FY    FY 2022   Q4 2022 Q3 2022 Q2 2022 Q1 2022
   Net fees         2022     2021   YoY (1)   YoY (1) YoY (1) YoY (1) YoY (1)
   Contract        £334.2m £266.1m   +23%      +14%    +21%    +29%    +32%
   Permanent       £96.4m   £89.6m    +6%       -5%    +10%     +5%    +18%
   GROUP           £430.6m £355.7m   +19%       +9%    +19%    +23%    +29%
                                                                          
   Management                                                             
   Structure
   DACH(4)         £148.9m £129.4m   +17%       +5%    +16%    +23%    +26%
   EMEA excl.      £156.5m £127.2m   +24%      +15%    +26%    +26%    +29%
   DACH(5)
   USA             £111.5m  £89.3m   +13%       +3%     +9%    +16%    +27%
   APAC            £13.7m   £9.8m    +42%      +36%    +40%    +32%    +71%
   GROUP           £430.6m £355.7m   +19%       +9%    +19%    +23%    +29%
                                                                          
   Top five                                                               
   countries
   Germany         £131.9m £117.8m   +14%       +3%    +13%    +20%    +24%
   Netherlands     £72.9m   £55.6m   +34%      +21%    +36%    +38%    +45%
   UK              £46.7m   £37.8m   +23%      +14%    +25%    +28%    +29%
   USA             £111.5m  £89.3m   +13%       +3%     +9%    +16%    +27%
   Japan            £9.4m   £6.9m    +47%      +55%    +44%    +25%    +78%
   ROW(6)          £58.2m   £48.3m   +18%      +12%    +23%    +21%    +19%
   Group           £430.6m £355.7m   +19%       +9%    +19%    +23%    +29%
                                                                           
   Division mix    FY 2022  FY 2021                                        
   Contract          78%      75%                                          
   Permanent         22%      25%                                          
                                                                           
   Sector mix      FY 2022 FY 2021                                         
   Technology        47%      47%                                          
   Life Sciences     22%      24%                                          
   Engineering       22%      20%                                          
   Other             9%       9%                                           
                                                                           

    

   Business performance highlights

    

   The Group delivered a strong performance for FY 2022 with net fees up  19%
   YoY, driven  by  our Contract  and  Permanent  businesses up  23%  and  6%
   respectively.  Q4 year on year net  fee increase of 9% reflects  continued
   growth against a strong post-Covid comparator.

    

   Contract

     • 7th consecutive quarter of double-digit  net fee growth, resulting  in
       full year net fees up 23%.

          ◦ Regionally, DACH was up 22% YoY, EMEA excl. DACH up 27%, USA up
            19% and APAC up 27%.
          ◦ Strong growth in Technology and Engineering, both up 27%, with
            Life Sciences up 13%.

     • The contractor order book(2) closed at  £186.0m, up 19% YoY (Q3  2022:
       up 24%), reflecting the high demand for skilled contractors across our
       markets and gives us good visibility going into FY23.

    

   Permanent

     • Permanent net fee income was up 6% YoY.

          ◦ DACH, our largest Permanent market (45% of net fees), delivered
            net fee growth of 6% YoY. EMEA excl. DACH also reported growth of
            6% YoY with USA down 8% following our strategic focus on Contract
            and strong prior year comparatives; APAC was up 45%.
          ◦ Technology was up 10% with strong growth in Engineering up 24%
            YoY. Life Sciences was down 14% YoY reflecting very strong prior
            year comparatives through the pandemic, particularly in the US.

    

   Headcount and productivity

     • Group average headcount  for the year  was up 12%  YoY, with  year-end
       headcount up 14%. We continue  to make highly targeted investments  in
       the  markets  and  skill  verticals  that  provide  the  best   growth
       opportunities and where we can drive the strongest returns.   
     • As a result of this  discipline and focus, headcount remains  slightly
       below the pre-pandemic peak despite material net fee growth.
     • FY22 productivity was  exceptionally high, up  7% YoY, reflecting  net
       fee growth that has  outpaced the growth  in headcount. As  previously
       guided, we expect  productivity to remain  above pre-pandemic  levels,
       although we expect it to reduce from these exceptional levels. 

    

   Regional highlights

    

   DACH delivered a strong performance in the year with net fees up 17% YoY.

     • Germany, our  largest  country  in  the  region  (89%  of  net  fees),
       delivered strong net fee growth of 14% driven by:

          ◦ Technology up 18% with higher demand for roles within
            Infrastructure, Cyber Security, Open-Source Software Development
            and Leadership and Strategic positions.
          ◦ Engineering up 27%, due to demand for Construction roles.

     • Very strong growth in Austria up 51% and Switzerland up 37%.

    

   EMEA excl. DACH saw very strong net fee growth up 24% YoY.

     • The Netherlands, our largest country in the region (47% of net  fees),
       delivered strong net fee growth up 34% YoY driven by:

          ◦ Technology up 36% with increased demand for Project Managers,
            Front & Back End Developers, ERP Consultants and Business
            Intelligence & Data Science roles.
          ◦ Engineering up 34% due to demand for Process Engineers,
            Electrical Engineers and Health & Safety Advisors.

     • UK saw a strong performance in the year with net fees up 23% YoY. This
       was driven by Technology up 30%  as demand increased for roles  within
       IT Leadership and  Strategy, Software Development  and Testing,  Cloud
       and Data & Business Intelligence.

    

   USA saw net fee growth of 13% YoY.

     • Strong growth in Contract, up 19%. Permanent was down 8% following our
       strategic focus on Contract and  very strong prior year  comparatives,
       when Life Sciences was  the standout performer  with high demand  from
       Covid-19 related activity.
     • Engineering up  32%,  driven by  demand  for roles  within  Electrical
       Engineering and Project Management.
     • Technology up  18%, with  a particular  focus on  roles within  Adobe,
       Software Developers, Mobile Applications and Salesforce.

    

   APAC net fees were up 42% YoY.

     • Japan, our largest country  in the region (69%  of net fees), saw  net
       fees grow 47%.
     • Technology was  up  32%  in  Japan,  driven  by  demand  for  Software
       Engineering roles.

    

   Balance sheet

   SThree remains  in  a robust  financial  position,  with net  cash  at  30
   November 2022 of £65m (30 November 2021: net cash £58m). Total  accessible
   liquidity of  £120m  comprises £65m  net  cash, a  £50m  revolving  credit
   facility (‘RCF’), which runs until 2025  (with options to extend it  until
   2027), and a £5m overdraft facility (RCF and overdraft fully undrawn).  In
   addition, SThree has a  £20m accordion facility as  well as a  substantial
   working capital  position,  reflecting  net  cash due  to  the  Group  for
   placements already undertaken.

    

   Analyst conference call

   SThree is hosting a  conference call for analysts  and investors today  at
   8.30am to  discuss  the FY  2022  trading update.  If  you would  like  to
   register for the conference call, please contact  1 SThree@almapr.co.uk.

           

   The Group plans  to present its  results for the  financial year ended  30
   November 2022 on 30 January 2023. In addition, the Group plans to host the
   second in its  series of  investor briefings at  13:00 GMT  on 30  January
   2023. This virtual  webinar will cover  the Group's technology  investment
   programme.

    

    

   (1)  All YoY growth rates in  this announcement are expressed at  constant
   currency.

   (2)  The  contractor  order  book  represents  value  of  net  fees  until
   contractual end dates, assuming all contractual hours are worked.

   (3) Productivity represents value of net fees divided by total headcount.

   (4) DACH – Germany, Austria and Switzerland.

   (5) EMEA  excl.  DACH –  UK,  Ireland, Belgium,  Netherlands,  Luxembourg,
   France, Spain and Dubai.

   (6) ROW – All other countries we operate in.

    

                                    - Ends -

    

   The information  contained  within  this announcement  is  deemed  by  the
   Company to constitute inside information under the Market Abuse Regulation
   (Regulation (EU)  No.596/2014) as  it forms  part of  UK Domestic  Law  by
   virtue of the European Union (Withdrawal) Act 2018.

    

    
                                         
   Enquiries:

    
   SThree plc          
   Timo Lehne, CEO

   Andrew Beach, CFO
                       via Alma
    

    
                      +44 20 3405 0205
   Alma PR
                       
   Hilary Buchanan

   Sam Modlin         SThree@almapr.co.uk

   Will Ellis Hancock

    

    

   Notes to editors

   SThree plc brings skilled people together to build the future. We are  the
   only global  specialist  talent  partner  focused  on  roles  in  Science,
   Technology, Engineering and Mathematics (‘STEM’), providing permanent  and
   flexible contract talent to a diverse base of over 8,200 clients across 14
   countries. Our Group’s c.3,100 staff  cover the Technology, Life  Sciences
   and Engineering sectors. SThree is part of the Industrial Services sector.
   We are listed on the Premium  Segment of the London Stock Exchange’s  Main
   Market, trading with ticker code STEM.

    

   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:          STEM
   LEI Code:      2138003NEBX5VRP3EX50
   Sequence No.:  208381
   EQS News ID:   1512283


    
   End of Announcement EQS News Service

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References

   Visible links
   1. mailto:SThree@almapr.co.uk


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