SThree: Q3 Trading Update (872961)

 
 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. 
 
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                GBP66.0m   GBP60.4m     +7%    +13%    +12% 
Permanent               GBP21.8m   GBP22.3m     -5%     -2%     +1% 
Group                   GBP87.8m   GBP82.7m     +4%     +9%     +9% 
 
Continental Europe      GBP50.1m   GBP47.0m     +5%    +14%    +12% 
USA                     GBP20.4m   GBP18.2m     +5%    +10%    +17% 
UK&I                    GBP12.1m   GBP13.0m     -7%    -12%     -7% 
Asia Pac & Middle East  GBP5.2m   GBP4.5m    +14%    +20%     +5% 
Group                   GBP87.8m   GBP82.7m     +4%     +9%     +9% 
 
Technology              GBP39.4m   GBP35.9m     +8%    +12%    +10% 
Life Sciences           GBP17.7m   GBP17.4m     +2%     +8%     +3% 
Banking & Finance       GBP9.4m   GBP10.5m    -12%    -13%     -3% 
Energy                  GBP10.2m   GBP9.3m     +8%    +29%    +25% 
Engineering             GBP8.6m   GBP8.0m     +6%     +9%    +19% 
Other(5)                GBP2.5m   GBP1.6m     +5%     -3%    +11% 
Group                   GBP87.8m   GBP82.7m     +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 GBP12m (31st August 2018: Net debt of circa GBP24m). 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: 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 
 
                                     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. 
 
     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. 
 
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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September 13, 2019 02:00 ET (06:00 GMT)
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