SThree: Half Year Trading Update (824393)
June 14 2019 - 2:01AM
UK Regulatory
SThree (STHR)
SThree: Half Year Trading Update
14-Jun-2019 / 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 June 2019
Half Year Trading Update
Encouraging first half performance with good momentum in Contract
SThree plc ("SThree" or the "Group"), the international STEM(1) specialist
staffing business, is pleased to issue a trading update(2) for the half year
ended 31st May 2019.
Highlights
· Performance in the first half of the year in line with management
expectations
· Group net fees up 9% YoY, consistent across both Q1 and Q2
· 86% of Group net fees generated from markets outside the UK&I (2018:
82%)
· Double digit growth in net fees in all regions outside the UK&I
· Strong net fee growth in Contract, in line with strategic focus
· Contract up 12% YoY, with Q2 up 13%
· Contract represented 74% of Group net fees in H1 (H1 2018: 72%)
· Permanent down 1% YoY, with Q2 down 2%
· Group period-end sales headcount up 12% YoY
Mark Dorman, Chief Executive, commented:
"In what is my first trading update with the Group, I am pleased with the
performance we are reporting today, delivered by a strong and talented team.
The benefits of our model and the structural drivers in our markets are seen
throughout our results with our key performance indicators demonstrating the
continued success of our sector and regional strategic focus. We are
particularly pleased to report double digit growth in net fees across three
of our four regions and have plans in place to drive growth across them all.
"The scale of the STEM opportunity is both enormous and growing across our
key regions and we are uniquely positioned to benefit from this. With this
backdrop, the structural market drivers for STEM recruitment services remain
very attractive and we continue to invest in high performing teams to drive
growth, in line with our vision to be the number one STEM talent provider in
the best STEM markets.
"Our deliberate focus on Contract, a natural function of our STEM
specialism, and the continued strength of our performance across key regions
and sectors in our well diversified portfolio, provides resilience in
today's more uncertain market conditions, whilst also delivering strong
growth over the medium term. Following the encouraging start to the year,
expectations for the full year remain unchanged."
Financial Highlights
H1 2019 Q2 2019 Q1 2019
Net fees H1 2019 H1 2018 YoY % 2 YoY % 2 YoY % 2
Contract GBP121.1m GBP106.7m +12% +13% +12%
Permanent GBP41.9m GBP41.7m -1% -2% +1%
Group GBP163.0m GBP148.4m +9% +9% +9%
Continental Europe (3) GBP93.9m GBP83.9m +13% +14% +12%
USA GBP35.5m GBP29.5m +13% +10% +17%
UK&I GBP23.8m GBP26.5m -9% -12% -7%
Asia Pac & Middle East GBP9.8m GBP8.5m +13% +20% +5%
Group GBP163.0m GBP148.4m +9% +9% +9%
ICT GBP73.1m GBP66.5m +11% +12% +10%
Life Sciences GBP31.5m GBP30.6m +6% +8% +3%
Banking & Finance GBP18.8m GBP20.1m -9% -13% -3%
Energy GBP18.4m GBP14.0m +27% +29% +25%
Engineering GBP16.3m GBP14.3m +14% +9% +19%
Other(4) GBP4.9m GBP2.9m +4% -3% +11%
Group GBP163.0m GBP148.4m +9% +9% +9%
Business Performance
Group net fees increased by 9% YoY, consistent across both Q1 and Q2.
Performance was driven by Continental Europe up 13% and USA up 13%. The
growth in Continental Europe was driven by DACH(5) and the Netherlands up
15% and 11% respectively. All regions delivered double digit growth, with
the exception of UK&I which, whilst net fees were down 9%, is stabilising.
Our major sectors ICT, Life Sciences, Energy and Engineering delivered
strong growth.
Contract continued to deliver a strong performance with net fees up 12% and
Q2 up 13%. All regions outside of UK&I delivered double digit growth with
Continental Europe up 16%, USA up 22% and APAC & MENA up 15%. Continental
Europe and USA combined now represent 80% of Contract net fees (H1 2018:
76%) in line with our strategy to focus on the world's biggest STEM contract
recruitment markets.
Permanent net fees were down 1% (Q2 down 2%) with UK&I net fees declining,
reflecting the previously reported UK restructuring. The USA saw net fees
decline by 10%, reflecting previously reported leadership and strategic
changes made in H1 2018. We saw strong growth in DACH, our largest Permanent
region, up 9% and in Japan, which continues to grow at a very fast rate, up
49% YoY.
Offices and People
The Group has a network of 45 offices in 16 countries, of which 38 are
outside the UK. The Group generated 86% of net fees for the period from
markets outside the UK&I (2018: 82%).
Average Group sales headcount was up 7% YoY with Continental Europe up 9%,
USA up 8%, Japan up 62% and UK&I down 2%. Average Permanent headcount
remained flat and average Contract headcount was up 11% in line with
strategy. Period end sales headcount was up 12% YoY, with Permanent up 7%
and Contract up 15%. Contract sales headcount represented 69% of total sales
headcount at period end (2018: 68%).
Balance Sheet
Net debt at 31st May 2019 was GBP8.0m (31st May 2018: Net debt of GBP6.2m). The
Group has a GBP50m 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: 55250260#
A replay facility will be available for 90 days on 0800 358 2049 Passcode:
301289947#
The Group will issue its interim results for the six months ended 31st May
2019 on 22nd July 2019.
(1) Science, Technology, Engineering & Mathematics
(2) All year on year financial growth %s in this announcement are expressed
at constant currency
(3) Continental Europe benefitted from an extra working day in Q2/H1 2019,
as the Whit Monday holiday fell in Q2 2018
(4) Other includes Creative, Procurement & Supply Chain and Sales &
Marketing
(5) DACH - Germany, Austria and Switzerland
- 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
Alma PR 020 3405 0205
Rebecca Sanders-Hewett SThree@almapr.co.uk
Hilary Buchanan
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. 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
3,100 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.: 10105
EQS News ID: 824393
End of Announcement EQS News Service
(END) Dow Jones Newswires
June 14, 2019 02:01 ET (06:01 GMT)
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