SThree:Q3 Trading Update (723569)

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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. 
 
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        GBP60.4m   GBP53.1m     +14%     +16%     +11% 
Permanent       GBP22.3m   GBP20.6m     +8%      +7%      +2% 
Group           GBP82.7m   GBP73.7m     +13%     +13%     +8% 
 
Continental     GBP47.0m   GBP37.9m     +24%     +20%     +15% 
Europe 
USA             GBP18.2m   GBP17.3m     +8%      +16%     +1% 
UK&I            GBP13.0m   GBP14.5m     -10%     -2%      -3% 
Asia Pac &      GBP4.5m    GBP4.0m      +16%     +1%      +15% 
Middle East 
Group           GBP82.7m   GBP73.7m     +13%     +13%     +8% 
 
ICT             GBP35.9m   GBP31.6m     +14%     +13%     +5% 
Life Sciences   GBP17.4m   GBP15.6m     +13%     +12%     +9% 
Banking &       GBP10.5m   GBP11.3m     -7%      +1%      -0% 
Finance 
Energy          GBP9.3m    GBP7.1m      +32%     +28%     +35% 
Engineering     GBP8.0m    GBP6.9m      +15%     +20%     +14% 
Other 2         GBP1.6m    GBP1.2m      +33%     +25%     +32% 
Group           GBP82.7m   GBP73.7m     +13%     +13%     +8% 
 
Contract / Perm 
Split 
Contract          73%      72% 
Permanent         27%      28% 
                  100%     100% 
 
Geographical 
Split 
Continental       57%      52% 
Europe 
USA               22%      23% 
UK&I              16%      20% 
Asia Pac &         5%       5% 
Middle East 
                  100%     100% 
 
Sector Split 
ICT               43%      43% 
Life Science      21%      21% 
Banking &         13%      15% 
Finance 
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 GBP24m (31 May 2018: GBP6.2m). 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 GBP50m 
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. 
 
ISIN:          GB00B0KM9T71 
Category Code: TST 
TIDM:          STHR 
LEI Code:      2138003NEBX5VRP3EX50 
Sequence No.:  6012 
EQS News ID:   723569 
 
End of Announcement EQS News Service
(END) Dow Jones Newswires
September 14, 2018 02:02 ET (06:02 GMT)
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