Q3 Trading Update

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 SThree (STHR) 
Q3 Trading Update 
 
15-Sep-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. 
 
15 September 2017 
 
    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 2017 to date; financial information relates to the quarter ended 
         31 August 2017. 
 
         Highlights 
 
  · Group gross profit ("GP") up 5%* YoY in Q3, with sustained momentum from 
  Q2 when Group GP grew by 4%* 
 
    · Solid growth across Engineering up 5%* YoY, Life Sciences up 3%* and 
    Global Energy up 35%* 
 
    · Strong growth in USA up 20%* YoY 
 
    · Robust performance in Continental Europe up 6% YoY 
 
    · UK&I remains challenging down 10%* YoY, in line with management 
    expectations 
 
  · Contract GP up 9%* YoY, with strong growth across Engineering up 10%*, 
  Life Sciences up 13%* and Energy up 37%* 
 
  · Permanent GP down 6%* YoY, broadly in line with average sales headcount 
  down 7% 
 
  · 80% of Group GP generated outside the UK&I (2016: 76%) 
 
  · Group period-end sales headcount up 3% on the 2016 year-end position, 
  and up 4% YoY 
 
  · Full year 2017 adjusted profit before tax expected to be ahead of 
  current consensus+ 
 
  + Consensus for the year ended 30 November 2017 is GBP42.4m, with a range of 
           GBP39.3m to GBP45.6m 
 
  Gary Elden, Chief Executive, commented: "We are pleased with our sustained 
momentum in the period, with gross profit showing a sequential increase over 
 Q2. A robust performance in Continental Europe and further strong growth in 
  the USA were particular highlights and our Contract business is continuing 
         to drive growth across the Group. 
 
   "We are well-positioned for the final quarter and now expect to deliver a 
         full year result ahead of current consensus." 
 
Financial Highlights - 
Group Gross Profit 
                                       Q3 2017  Q2 2017 Q1 2017 
Gross Profit          Q3 2017  Q3 2016 YoY % 1  YoY % 1 YoY % 1 
 
Contract              GBP53.1m   GBP45.4m     +9%      +9%     +7% 
Permanent             GBP20.6m   GBP20.6m     -6%      -6%     -14% 
Group                 GBP73.7m   GBP66.0m     +5%      +4%      - 
 
UK&I                  GBP14.5m   GBP15.8m     -10%    -14%     -19% 
Continental Europe    GBP37.9m   GBP32.9m     +6%      +7%     +7% 
USA                   GBP17.3m   GBP13.5m     +20%    +20%     +12% 
Asia Pac & Middle     GBP4.0m    GBP3.8m     +1%      +5%     -14% 
East 
Group                 GBP73.7m   GBP66.0m     +5%      +4%      - 
 
ICT                   GBP31.6m   GBP29.3m     +1%      +1%     +2% 
Banking & Finance     GBP11.3m   GBP10.5m     +1%      -1%     -8% 
Energy                GBP7.1m    GBP4.8m     +35%    +23%     -8% 
Engineering           GBP6.9m    GBP6.2m     +5%      +3%     -1% 
Life Sciences         GBP15.6m   GBP14.3m     +3%      +7%     +4% 
Other Sectors 3       GBP1.2m    GBP0.9m     +24%    +13%     +4% 
Group                 GBP73.7m   GBP66.0m     +5%      +4%      - 
 
Contract / Perm Split 
Contract                72%      69% 
Permanent               28%      31% 
                        100%    100% 
 
Geographical Split 
UK&I                    20%      24% 
Continental Europe      52%      50% 
USA                     23%      20% 
Asia Pac & Middle        5%      6% 
East 
                        100%    100% 
 
Sector Split 
ICT                     43%      44% 
Banking & Finance       15%      16% 
Energy                  10%      7% 
Engineering              9%      10% 
Life Science            21%      22% 
Other Sectors 3          2%      1% 
                        100%    100% 
 
                                       Q3 2017  Q2 2017 Q1 2017 
Operating Metrics     Q3 2017  Q3 2016 YoY %    YoY %   YoY % 
 
Contract Runners 2 
UK&I                   2,512    2,693    -7%      -6%     -8% 
Continental Europe     4,925    4,174    +18%    +19%     +19% 
USA                    1,631    1,316    +24%    +23%     +14% 
Asia Pac & Middle       489      411     +19%    +25%     +19% 
East 
Group                  9,557    8,594    +11%    +12%     +9% 
 
1 At constant currency 
2 Period-end number of contractors onsite with clients 
3 Other Sectors includes Procurement & Supply Chain and 
Sales & Marketing 
 
Group gross profit ("GP") was up 5%* YoY and up 5%* sequentially vs Q2, with 
  Q2 having been up 4%* YoY after a flat performance in Q1. USA GP was ahead 
  by 20%* YoY in the quarter, another strong performance after being up 20%* 
 in Q2. Continental Europe posted a robust performance in the quarter up 6%* 
   YoY. Sales headcount for the Group was up 4% YoY and 3% ahead of the 2016 
         year end position. 
 
  Contract continues to perform strongly, up 9%* YoY with a large proportion 
     of the growth in the quarter from Continental Europe up 12%* and USA up 
    24%*, offset by a decline in the UK&I, down 10%*. On a sector basis, the 
 Group maintained strong growth in Engineering up 10%* YoY and Life Sciences 
up 13%*. We continued to prioritise growth in Contract sales headcount, with 
         an average increase in the quarter of 8% YoY. 
 
 Permanent GP was down 6%* YoY, broadly in line with average sales headcount 
     down 7% YoY. In the quarter, Permanent GP in UK&I declined by 12%* YoY, 
  Continental Europe declined by 9%*, offset by a strong performance in USA, 
         up 12%*. 
 
  Average Group sales heads were up 2% YoY. UK&I sales headcount was down 9% 
      YoY, Continental Europe was up 13%, USA was down 3% and Asia Pacific & 
 Middle East was down 15%. Contract sales headcount represented 65% of total 
         sales headcount at the end of the quarter (2016: 62%). 
 
      The Group has a network of 39 offices in 16 countries, of which 32 are 
 outside the UK. The Group generated 80% of Gross Profit for the period from 
         markets outside the UK&I (2016: 76%). 
 
SThree remains in a strong financial position. Net debt at 31 August 2017 
was circa GBP8m (31 August 2016: GBP14m). The Group has a GBP50m revolving credit 
facility ("RCF") with Citibank 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] 
 
For access to the call please quote passcode SThree 
 
A replay facility will be available for seven days on [phone] 
followed by 1582104# 
 
  The Group will be hosting a Capital Markets Day in London on the afternoon 
         of 15 November 2017. 
 
The Group will issue a trading update for the year ended 30 November 2017 on 
15 December 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 
2,700 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.:  4635 
 
End of Announcement EQS News Service 
 
609909 15-Sep-2017 
 
 

(END) Dow Jones Newswires

September 15, 2017 02:03 ET (06:03 GMT)