REG-SThree SThree: FY21 Trading Update

SThreeAnnouncement

13/12/2021 07:05

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   SThree (STEM)
   SThree: FY21 Trading Update

   13-Dec-2021 / 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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   13 December 2021

                                        

                                        

                                   SThree plc

                                        

                             FY 2021 Trading Update

                                        

        A record net fee performance with strong growth across all major
                                  geographies

    

   SThree plc ("SThree" or the "Group"), the only global pure-play specialist
   staffing business focused on roles in Science, Technology, Engineering and
   Mathematics ('STEM'), today issues a trading update for the financial year
   ended 30 November 2021.

    

   Highlights

     • Group net  fees  for  the full  year  up  19% YoY(1),  driven  by  the
       execution of our strategy and increased demand for STEM skills
     • Third consecutive quarter of over 20%  growth with Q4 net fees up  25%
       YoY
     • Three largest countries represent  74% of Group  net fees: Germany  up
       23%, USA up 24% and Netherlands up 19% YoY
     • Contract and Permanent net fees up 17% and 24% YoY, respectively
     • Contract net fees represent 75% of Group net fees (FY 2020: 76%)
     • Contractor order book(2) up 43% YoY  (Q3 2021: up 41% YoY)
     • Robust balance sheet, with  £58m net cash as  at 30 November 2021  (30
       November 2020: £50m)

    

   As 2020 was impacted by Covid-19, the Group has also provided  comparisons
   against 2019  below and  in the  table that  follows. Highlights  vs  2019
   include:

    

     • Full year net fees up 9%
     • Group Q4 net fees up 16%
     • Germany net fees up 18%, USA up 26% and Netherlands up 7%
     • Contractor order book up 30%

    

    

   Management Succession

   The Board also announces that Mark Dorman  will be stepping down from  the
   Board and as CEO of the Group  on 31 December 2021. Timo Lehne,  currently
   the Senior Managing  Director of SThree's  largest region, DACH  (Germany,
   Austria and  Switzerland), will  be  appointed Interim  CEO and  for  that
   period will join the Board as Executive Director from 1 January 2022.  Mr.
   Dorman will continue to assist the Group in facilitating a smooth handover
   and transition until 1 April 2022.

    

   Mark Dorman, Chief Executive, commented:

   "SThree has continued to  deliver strong results in  our final quarter  of
   the year, and delivered full year  net fee growth of 19% year-on-year  and
   9% versus 2019.  Our strategy,  positioned at  the centre  of the  secular
   trends of STEM and flexible working, has continued to drive this excellent
   performance.

    

   The Group expects  to deliver record  profits for the  full year, in  line
   with  consensus  expectations(3),  which   were  materially  upgraded   in
   September 2021. Our people have been incredibly resilient, productive  and
   dedicated in delivering  these results,  and I  thank them  for all  their
   efforts. I am proud that SThree delivers meaningful work opportunities  to
   our candidates and brings skilled people together to build the future.

    

   I have agreed with the Board that this is the right time for a change  for
   both SThree and me, due  to personal reasons. It  has been a privilege  to
   lead SThree  through  such  extraordinary times,  working  with  talented,
   dedicated and values-driven  people for nearly  three years. Our  strategy
   has driven  excellent  financial  performance  and  benefits  to  all  our
   stakeholders. I  wish the  business  well for  the future  whilst  looking
   forward to a new personal challenge."

    

   James Bilefield, Non-Executive Chair, stated:

   "The Board expresses its appreciation to Mark for his service to the Group
   over the past  nearly three years.  He has steered  the Group through  the
   complexities of  the Covid-19  pandemic, developed  a clear  strategy  and
   overseen the  delivery of  strong financial  results.  We  wish him  every
   success for the future.

    

   We  are  very  well  positioned  moving  into  2022,  underpinned  by  our
   contractor order book which is up 43% year-on-year and provides  excellent
   visibility. In  the  year  ahead,  we  will  focus  on  investing  in  our
   infrastructure,   talent   acquisition   and   our   global   go-to-market
   propositions. We  aim to  maintain our  profit margin  at current  levels,
   whilst investing in  the business to  drive long-term sustainable  growth.
   Although the external environment remains  uncertain, we have proven  that
   we can grow  through periods  of volatility  and remain  committed to  the
   delivery of our strategy for the benefit of all our stakeholders.

    

   We now look forward to accelerating the execution of our strategy. We  are
   fortunate in having Timo, our most experienced Managing Director from  our
   largest region, ready and able to assume the role of Interim CEO whilst we
   conduct a thorough search for Mark's permanent successor."

    

                                                                           
                                        FY     Q4   Q3   Q2   Q1     Q4   FY
   Net Fees            FY 2021 FY 2020 2021   2021 2021 2021 2021   2021 2021
                                       YOY    YOY  YOY  YOY  YOY     vs   vs
                                                                    2019 2019
                                                                           
   Contract            £266.1m £233.4m +17%   +26% +27% +18% -2%    +18% +9%
   Permanent           £89.6m  £75.2m  +24%   +25% +36% +36%  -     +12% +8%
   GROUP               £355.7m £308.6m +19%   +25% +29% +22% -1%    +16% +9%
                                                                           
   Management                                                              
   structure
   DACH (4)            £129.4m £105.8m +24%   +30% +35% +28% +3%    +28% +20%
   EMEA ex DACH (5)    £127.2m £117.6m +9%    +24% +21% +10% -14%   -1%  -9%
   USA                 £89.3m  £77.3m  +24%   +18% +31% +28% +19%   +31% +26%
   APAC                 £9.8m   £7.9m  +34%   +64% +33% +59% -14%   +16% -1%
   GROUP               £355.7m £308.6m +19%   +25% +29% +22% -1%    +16% +9%
                                                                           
   Top five countries                                                      
   Germany             £117.8m £96.9m  +23%   +28% +35% +28% +3%    +25% +18%
   Netherlands         £55.6m  £47.3m  +19%   +36% +24% +21% -4%    +15% +7%
   UK                  £37.8m  £35.1m  +8%    +27% +24% +3%  -17%   -1%  -13%
   USA                 £89.3m  £77.2m  +24%   +18% +31% +28% +19%   +31% +26%
   Japan                £6.9m   £5.9m  +27%   +39% +23% +77% -21%   +4%  -5%
   ROW (6)             £48.3m  £46.2m  +7%    +20% +21% +10% -16%   -3%  -11%
   GROUP               £355.7m £308.6m +19%   +25% +29% +22% -1%    +16% +9%
                                                                           
   Division mix        FY 2021                                             
   Contract              75%                                               
   Permanent             25%                                               
                                                                           
   Sector mix          FY 2021                                             
   Technology            47%                                               
   Life Sciences         24%                                               
   Engineering           20%                                               
   Banking & Finance     7%                                                
   Other                 2%                                                

    

    

    

   Business Performance highlights

    

   The Group delivered a strong performance for FY 2021 with net fees up  19%
   YoY  with  our  Contract   and  Permanent  businesses   up  17%  and   24%
   respectively.

    

   Contract

     • Contract performance remained strong into the final quarter, resulting
       in full year net fee income up 17%
     • The contractor order  book(2) closed  up 43%  YoY (Q3  2021: up  41%),
       reflecting the ongoing high demand for skilled contractors across  our
       markets which underpins our positive outlook

    

   Permanent

     • Permanent net fee income was up 24% YoY
     • DACH and USA, our two largest Permanent regions, were up 17% and  53%,
       respectively YoY

    

   Headcount and Productivity:

     • Year-end headcount up 6% YoY
     • Following significant H2 investment  in headcount Group headcount  was
       sequentially up 9% vs H1 2021 and up 5% vs Q3 2021
     • FY  2021  saw  productivity  improve  by  31%  YoY.  We  expect   this
       improvement to ease back but to remain above historic levels

    

   Regional highlights:

    

   DACH delivered a strong performance in the year with net fees up 24% YoY

     • Germany, our largest country in  the region, delivered strong net  fee
       growth of 23%
     • Technology was up 34%,  driven by demand  for infrastructure and  open
       source software development roles
     • Life Sciences was up 25%, with demand for laboratory staff and quality
       assurance roles continuing to increase

    

   EMEA ex DACH saw net fees grow 9% YoY, after a significant recovery in H2

     • The Netherlands, our largest country in the region, finished the  year
       strongly with net fees up 19%
     • Technology was up 15% in the Netherlands, driven by demand for SAP and
       ERP specialists as well as cybersecurity experts
     • Engineering was up 28% with particular focus on project management and
       quality, health, safety and environment roles
     • Net fees  in  the  UK  were  up  8%  reflecting  a  strong  sequential
       quarter-on-quarter improvement throughout the year. This was driven by
       Technology up 11% as demand increased for tech-delivery skills such as
       business analysts, project managers and product owners

    

   USA, the world's largest STEM staffing market, delivered an excellent  net
   fee performance in the year up 24% YoY

     • Technology was  up  35%  driven  by  significant  demand  in  software
       development, Salesforce skills, and mobile applications

     • Life Sciences, our largest sector in the USA, saw a strong performance
       throughout the year with FY net fees up 25% with roles within clinical
       operations, biometrics and quality assurance in demand
     • Engineering was up 11%, driven by increased roles in renewable sectors
       such as wind and solar farms as well as battery storage

    

   APAC net fees were up 34% YoY, with a 64% increase in Q4 YoY

     • Japan, our largest country in the region, saw net fees grow 27%
     • Technology was up 29% in Japan, with Life Sciences up 48%

    

   Balance sheet

   SThree remains  in  a robust  financial  position,  with net  cash  at  30
   November 2021 of £58m (30 November 2020: net cash £50m). As at 30 November
   2021 the Group has total accessible liquidity of £113m comprising £58m net
   cash, a  £50m  revolving  credit  facility ("RCF")  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 will host a webinar for  analysts and investors today at 8.30am  to
   discuss the FY 2021 Trading Update. To register for the webinar please use
   this link:  1 https://bit.ly/STEM_Q4_webinar

           

   The Group will present its results for the financial year ended 30
   November 2021 on 31 January 2022.

    

    

   (1)  All  growth rates  in  this announcement  are expressed  at  constant
   currency and exclude Australia, which we exited in Q4 2020

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

   (3) Current consensus analyst PBT expectations are £59.3m. Source:  SThree
   compiled consensus

   (3) DACH - Germany, Austria and Switzerland

   (4) EMEA ex DACH - UK, Ireland, Belgium, Netherlands, Luxembourg,  France,
   Spain and Dubai

   (5)  ROW  -  All  other   countries  we  operate  in  excluding   Germany,
   Netherlands, UK, USA and Japan

    

   The Company confirms that there is no further information about Timo Lehne
   requiring disclosure under paragraph 9.6.13 (2) to (6) of the Listing
   Rules of the UK Listing Authority

    

   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.

    

                                    - Ends -

    

    

   Enquiries:                                                         

    
   SThree plc                                      +44 7825 122523
   Rebecca Matts, Group Corporate Affairs Director

                                                    r.matts@sthree.com

    
                                                   020 3405 0205
   Alma PR
                                                    
   Susie Hudson

   John Coles                                      SThree@almapr.co.uk

    

    

    

   Notes to editors

   SThree plc brings skilled people together to build the future.  We are the
   only global pure-play  specialist staffing  business focused  on roles  in
   Science,  Technology,  Engineering  and  Mathematics  ('STEM'),  providing
   permanent and flexible  contract talent to  a diverse base  of over  9,000
   clients  across  14  countries.  Our  Group's  c.2,700  staff  cover   the
   Technology, Life  Sciences, Engineering  and  Banking &  Finance  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.:  129584
   EQS News ID:   1256817


    
   End of Announcement EQS News Service

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