Half Year Trading Update

Dow Jones received a payment from EQS/DGAP to publish this press release.

 
 
 SThree (STHR) 
Half Year Trading Update 
 
16-Jun-2017 / 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. 
 
16 June 2017 
 
*Half Year Trading Update* 
 
SThree plc ("SThree" or the "Group"), the international STEM specialist 
staffing business, is today issuing a trading update for the half year ended 
31 May 2017. 
 
*Highlights* 
 
- Group gross profit ("GP") up 2%* YoY with acceleration in Q2 when Group GP 
grew by 4%* 
 
- Strong growth in USA up 16%* YoY 
 
- Good performance in Continental Europe up 7%* YoY 
 
- Continued robust growth in Life Sciences up 6%* YoY 
 
- UK&I performance as expected adversely impacted by the decision of the UK 
to leave the EU and Public Sector reforms, with GP down 16%* YoY 
 
- 80% of Group GP generated outside the UK (H1 2016: 73%) 
 
- Contract GP up 8%* YoY, with strong growth across Engineering up 17%*, 
Life Sciences up 15%* and Energy up 9%* 
 
- Permanent GP down 10%* YoY, with Permanent productivity up 8%* 
 
- Group period-end sales headcount up 1% on the 2016 year-end position, but 
down 4% YoY. 
 
_*at constant currency_ 
 
Gary Elden, Chief Executive, commented: 
 
"We are encouraged by the improvement in momentum across the business in the 
period, particularly the strong performances in Continental Europe and the 
USA, which is now our second largest region. 
 
"Our Contract business continues to deliver good growth across almost all 
regions, with Continental Europe and the USA again being the highlights. 
 
"'Our Permanent business benefited from a further improvement in 
productivity, driven by the particularly strong performance in USA. Further 
productivity gains remain the priority for our Permanent business in 2017. 
 
"Looking ahead, the continued momentum of our Contract business and improved 
Permanent yields give us a solid base from which to grow in a macro-economic 
environment which remains uncertain." 
 
+-------------+---------+---------+--------+---------+---------+ 
|*Financial Highlights  |         |        |         |         | 
|- *                    |         |        |         |         | 
+-------------+---------+---------+--------+---------+---------+ 
|*Group Gross Profit*   |         |        |         |         | 
+-------------+---------+---------+--------+---------+---------+ 
|             |         |         |*H1     |*Q2 2017*|*Q1 2017*| 
|             |         |         |2017*   |         |         | 
+-------------+---------+---------+--------+---------+---------+ 
|*Gross       |*H1 2017*|*H1 2016*|*YoY %  |*YoY % *1|*YoY % *1| 
|Profit*      |         |         |*1      |         |         | 
+-------------+---------+---------+--------+---------+---------+ 
|             |         |         |        |         |         | 
+-------------+---------+---------+--------+---------+---------+ 
|Contract     |GBP94.2m   |GBP79.7m   |+8%     |+9%      |+7%      | 
+-------------+---------+---------+--------+---------+---------+ 
|Permanent    |GBP40.1m   |GBP40.1m   |-10%    |-6%      |-14%     | 
+-------------+---------+---------+--------+---------+---------+ 
|_Group_      |_GBP134.3m_|_GBP119.8m_|*+2%*   |*+4%*    |*-*      | 
+-------------+---------+---------+--------+---------+---------+ 
|             |         |         |        |         |         | 
+-------------+---------+---------+--------+---------+---------+ 
|UK&I         |GBP27.0m   |GBP32.1m   |-16%    |-14%     |-19%     | 
+-------------+---------+---------+--------+---------+---------+ 
|Continental  |GBP69.0m   |GBP57.9m   |+7%     |+7%      |+7%      | 
|Europe       |         |         |        |         |         | 
+-------------+---------+---------+--------+---------+---------+ 
|USA          |GBP29.7m   |GBP22.1m   |+16%    |+20%     |+12%     | 
+-------------+---------+---------+--------+---------+---------+ 
|Asia Pac &   |GBP8.6m    |GBP7.7m    |-4%     |+5%      |-14%     | 
|Middle East  |         |         |        |         |         | 
+-------------+---------+---------+--------+---------+---------+ 
|_Group_      |_GBP134.3m_|_GBP119.8m_|*+2%*   |*+4%*    |*-*      | 
+-------------+---------+---------+--------+---------+---------+ 
|             |         |         |        |         |         | 
+-------------+---------+---------+--------+---------+---------+ 
|ICT          |GBP59.7m   |GBP54.2m   |+1%     |+1%      |+2%      | 
+-------------+---------+---------+--------+---------+---------+ 
|Banking &    |GBP20.5m   |GBP19.5m   |-5%     |-1%      |-8%      | 
|Finance      |         |         |        |         |         | 
+-------------+---------+---------+--------+---------+---------+ 
|Energy       |GBP11.3m   |GBP9.4m    |+7%     |+23%     |-8%      | 
|Engineering  |GBP11.8m   |GBP10.7m   |+1%     |+3%      |-1%      | 
|Life Sciences|GBP28.8m   |GBP24.1m   |+6%     |+7%      |+4%      | 
+-------------+---------+---------+--------+---------+---------+ 
|Other 3      |GBP2.2m    |GBP1.9m    |+9%     |+13%     |+4%      | 
+-------------+---------+---------+--------+---------+---------+ 
|_Group_      |_GBP134.3m_|_GBP119.8m_|_+2%_   |_+4%_    |_-_      | 
+-------------+---------+---------+--------+---------+---------+ 
|             |         |         |        |         |         | 
+-------------+---------+---------+--------+---------+---------+ 
|*Contract /  |         |         |        |         |         | 
|Perm Split*  |         |         |        |         |         | 
+-------------+---------+---------+--------+---------+---------+ 
|Contract     |70%      |67%      |        |         |         | 
+-------------+---------+---------+--------+---------+---------+ 
|Permanent    |30%      |33%      |        |         |         | 
+-------------+---------+---------+--------+---------+---------+ 
|             |_100%_   |_100%_   |        |         |         | 
+-------------+---------+---------+--------+---------+---------+ 
|             |         |         |        |         |         | 
+-------------+---------+---------+--------+---------+---------+ 
|*Geographical|         |         |        |         |         | 
|Split*       |         |         |        |         |         | 
+-------------+---------+---------+--------+---------+---------+ 
|UK&I         |20%      |27%      |        |         |         | 
+-------------+---------+---------+--------+---------+---------+ 
|Continental  |51%      |48%      |        |         |         | 
|Europe       |         |         |        |         |         | 
+-------------+---------+---------+--------+---------+---------+ 
|USA          |22%      |19%      |        |         |         | 
+-------------+---------+---------+--------+---------+---------+ 
|Asia Pac &   |7%       |6%       |        |         |         | 
|Middle East  |         |         |        |         |         | 
+-------------+---------+---------+--------+---------+---------+ 
|             |_100%_   |_100%_   |        |         |         | 
+-------------+---------+---------+--------+---------+---------+ 
|             |         |         |        |         |         | 
+-------------+---------+---------+--------+---------+---------+ 
|*Sector      |         |         |        |         |         | 
|Split*       |         |         |        |         |         | 
+-------------+---------+---------+--------+---------+---------+ 
|ICT          |44%      |45%      |        |         |         | 
|Banking &    |15%      |16%      |        |         |         | 
|Finance      |9%       |8%       |        |         |         | 
|Energy       |9%       |9%       |        |         |         | 
|Engineering  |         |         |        |         |         | 
+-------------+---------+---------+--------+---------+---------+ 
|Life Sciences|21%      |20%      |        |         |         | 
+-------------+---------+---------+--------+---------+---------+ 
|Other 3      |2%       |2%       |        |         |         | 
+-------------+---------+---------+--------+---------+---------+ 
|             |_100%_   |_100%_   |        |         |         | 
+-------------+---------+---------+--------+---------+---------+ 
|             |         |         |        |         |         | 
+-------------+---------+---------+--------+---------+---------+ 
|             |         |         |        |         |         | 
+-------------+---------+---------+--------+---------+---------+ 
|             |         |         |*H1     |*Q2 2017*|*Q1 2017*| 
|             |         |         |2017*   |         |         | 
+-------------+---------+---------+--------+---------+---------+ 
|*Operating   |*H1 2017*|*H1 2016*|*YoY %* |*YoY %*  |*YoY %*  | 
|Metrics*     |         |         |        |         |         | 
+-------------+---------+---------+--------+---------+---------+ 
|             |         |         |        |         |         | 
+-------------+---------+---------+--------+---------+---------+ 
|*Contract    |         |         |        |         |         | 
|Runners *2   |         |         |        |         |         | 
+-------------+---------+---------+--------+---------+---------+ 
|UK&I         |2,515    |2,680    |-6%     |-6%      |-8%      | 
+-------------+---------+---------+--------+---------+---------+ 
|Continental  |4,698    |3,948    |+19%    |+19%     |+19%     | 
|Europe       |         |         |        |         |         | 
+-------------+---------+---------+--------+---------+---------+ 
|USA          |1,549    |1,262    |+23%    |+23%     |+14%     | 
+-------------+---------+---------+--------+---------+---------+ 
|Asia Pac &   |487      |391      |+25%    |+25%     |+19%     | 
|Middle East  |         |         |        |         |         | 
+-------------+---------+---------+--------+---------+---------+ 
|_Group_      |_9,249_  |_8,281_  |_+12%_  |_+12%_   |_+9%_    | 

+-------------+---------+---------+--------+---------+---------+ 
|             |         |         |        |         |         | 
+-------------+---------+---------+--------+---------+---------+ 
|             |         |         |        |         |         | 
+-------------+---------+---------+--------+---------+---------+ 
|_1 At constant         |         |        |         |         | 
|currency_              |         |        |         |         | 
+-------------+---------+---------+--------+---------+---------+ 
|_2 Period end number of contractors onsite with clients_      | 
+-------------+---------+---------+--------+---------+---------+ 
|_3 Other Sectors include Procurement & Supply Chain and       | 
|Sales and Marketing _                                         | 
+-------------+---------+---------+--------+---------+---------+ 
 
Group gross profit ("GP") increased by 2%* YoY, with Q2 up 4%* after a flat 
performance in Q1. 
 
US GP was ahead by 16%* in the first half, making it our second largest 
region for the first time, as the restructuring measures implemented in H2 
2016 took effect. While the headline growth rate in H1 was boosted by a 
number of one-off factors, we are encouraged by the continued recovery in 
the region. 
 
Contract continues to deliver a pleasing performance with GP up 8%* YoY and 
Q2 2017 up 9%* against a strong comparative of +10%* in Q2 2016. A large 
proportion of the growth in Contract at the half year was driven by 
Continental Europe, up 16%* and USA up 17%*. 
 
Permanent GP was down 10%* YoY, with average sales headcount down 17%. At 
the half year, UK&I Permanent GP was down 25%*, Continental Europe was down 
9%*, offset by USA strongly up 14%*. Permanent GP was down 6%* in Q2 with 
UK&I down 11%* and Continental Europe down 8%*, offset by strong performance 
in USA, up 13%*. Permanent productivity improved by 10%* YoY in Q2, driven 
by UK&I up 14%* and USA up 36%*. 
 
Overall, period end sales headcount was down 4% YoY, with Permanent down 12% 
and Contract up 2%. 
 
Average Group sales headcount is down 7% YoY. UK&I sales headcount was down 
17%, Continental Europe was up 6% and USA down 20%. Contract sales headcount 
represented 64% of total sales headcount at period end (2016: 61%). 
 
The Group has a network of 37 offices in 15 countries, of which 31 are 
outside the UK. The Group generated 80% of Gross Profit for the period from 
markets outside the UK&I (2016: 73%). 
 
SThree remains in a strong financial position. Net Cash at 31 May 2017 was 
circa GBP5m (31 May 2016: Net Debt of GBP4.2m). The Group has a GBP50m revolving 
credit facility ("RCF") with RBS and HSBC, which is committed to 2019. 
 
_*at constant currency _ 
 
SThree is hosting an analyst conference call today at 0830 BST. The details 
are as follows: 
 
Telephone number: [phone] or 0808 109 0700 
 
For access to the call please quote passcode SThree 
 
A replay facility will be available for seven days on [phone] / 
Access Pin: 9192006# 
 
The Group will issue its interim results for the six months ended 31 May 
2017 on 24 July 2017. 
 
- Ends - 
 
*Enquiries:* 
*SThree plc*                                     *020 7268 6000* 
Gary Elden, Chief Executive Officer 
Alex Smith, Chief Financial Officer 
Sarah Anderson, Deputy Company Secretary/IR 
Enquiries 
*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 
7,000 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 
2,600 employees in eighteen 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. 
 
Language:      English 
ISIN:          GB00B0KM9T71 
Category Code: TST 
TIDM:          STHR 
LEI Code:      2138003NEBX5VRP3EX50 
Sequence No.:  4310 
 
End of Announcement EQS News Service 
 
583453 16-Jun-2017 
 
 

(END) Dow Jones Newswires

June 16, 2017 02:01 ET (06:01 GMT)