SThree: FY19 Trading Update (934103)

 
 SThree (STHR) 
SThree: FY19 Trading Update 
12-Dec-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. 
 
12 December 2019 
 
    SThree plc 
 
    FY19 Trading Update 
 
    Strong performance driving record adjusted profit before tax 
 
       SThree plc ("SThree" or the "Group"), the global pure-play specialist 
  staffing business focused on roles in Science, Technology, Engineering and 
       Mathematics ('STEM'), is pleased to issue a trading update(1) for the 
        financial year ended 30 November 2019. 
 
        Highlights 
 
  · Net fees for the full year grew by 5% 
 
    · Strong growth in USA, Continental Europe and APAC & MENA 
 
    · Robust growth across Technology, Life Sciences, Engineering and Energy 
 
    · 86% of Group net fees generated from international(2) markets (2018: 
    83%) 
 
    · Strong growth in Contract net fees up 8%, in line with our strategy, 
    now representing 74% of Group net fees (2018: 72%) 
 
    · Permanent net fees down 3% 
 
  · Adjusted profit before tax for the year expected to be in line with 
  market consensus(3) and an all-time record for the Group 
 
  · Net cash of GBP11m at 30 November 2019, ahead of market consensus 
 
        Mark Dorman, Chief Executive, commented: 
 
     "As the only global, pure-play STEM specialist, SThree has continued to 
   deliver year-on-year growth materially ahead of the wider market. This is 
   driven by our robust performance across all of our international regions, 
 which constitute the majority of the Group, and supportive long-term market 
  dynamics with the well documented growth in both STEM and flexible working 
   (Contract), giving us confidence in our delivery. Our deliberate focus on 
      Contract, a natural function of our STEM specialism, continues to be a 
 strong driver of Group performance and remains a key strategic priority for 
        the Group. 
 
"Looking ahead is difficult at the best of times and even more so now, given 
   the significant macro market and political uncertainties. Notwithstanding 
   this, I am pleased that in our key growth markets, the new financial year 
has started well with good demand, and this gives us confidence that we will 
        continue to outperform materially in our international markets.(4) 
 
"Our business north star is our purpose: bringing skilled people together to 
 build the future, and we remain committed to our vision of being the number 
 one STEM talent provider in the best STEM markets. We are confident that we 
 are in the right STEM markets; with the size of the opportunity ahead of us 
and with our scalable operational capabilities globally, we are confident in 
      our ability to deliver growth. Whilst we remain cognisant of the macro 
     uncertainties, we remain confident that we have the right vision, niche 
focus, platform and teams to outperform as we are uniquely positioned as the 
        only global pure-play STEM specialist." 
 
Financial 
Highlights 
                              FY 2019  Q4 2019   Q3   Q2   Q1 
                                                2019 2019 2019 
Net Fees    FY 2019  FY 2018   YoY %    YoY %   YoY  YoY  YoY 
                                                 %    %    % 
 
Contract    GBP254.4m   GBP232.1m     +8%      +3%    +7%  +13% +12% 
Permanent   GBP87.8m   GBP89.0m     -3%      -4%    -5%  -2%  +1% 
Group       GBP342.2m   GBP321.1m     +5%      +1%    +4%  +9%  +9% 
 
Continental GBP196.7m   GBP183.4m     +8%      +1%    +5%  +14% +12% 
Europe 
USA         GBP76.7m   GBP66.6m     +9%      +6%    +5%  +10% +17% 
UK&I        GBP48.1m   GBP53.1m     -9%      -11%   -7%  -12% -7% 
Asia Pac &  GBP20.7m   GBP18.0m    +12%      +8%    +14% +20% +5% 
Middle East 
Group       GBP342.2m   GBP321.1m     +5%      +1%    +4%  +9%  +9% 
 
Technology  GBP152.6m   GBP142.0m     +7%      +1%    +8%  +12% +10% 
Life        GBP67.8m   GBP63.1m     +5%      +6%    +2%  +8%  +3% 
Sciences 
Banking &   GBP37.9m   GBP42.5m    -13%      -20%   -12% -13% -3% 
Finance 
Energy      GBP39.1m   GBP33.4m    +16%      +6%    +8%  +29% +25% 
Engineering GBP34.8m   GBP30.6m    +11%      +13%   +6%  +9%  +19% 
Other(5)    GBP10.0m   GBP9.5m      +3%      -3%    +5%  -3%  +11% 
Group       GBP342.2m   GBP321.1m     +5%      +1%    +4%  +9%  +9% 
 
        Business performance 
 
        Group net fees for the year were up 5% with growth across all our 
international markets, up 8%. We have made management changes in the UK&I in 
   Q4 to positively impact performance, against a challenging macro-economic 
        and political backdrop. 
 
     Contract net fees were up 8%, with growth across all sectors apart from 
  Banking & Finance. Contract growth was driven by Continental Europe, which 
was up 11% largely due to Technology and the USA up 17% driven by Energy and 
 Life Sciences. Continental Europe and USA combined now represent 81% of our 
        Contract net fees (2018: 78%). 
 
   Permanent net fees, which represent 26% of the business, were down 3% for 
the year. Our largest Permanent market, DACH(6), saw good growth of 5%, with 
  Continental Europe remaining flat. APAC & MENA saw growth of 16% driven by 
   excellent performance in Japan. Net fees in the USA were down 11% year on 
  year, reflecting previously reported leadership and strategic changes made 
        in 2018 and the UK&I was down 18%. 
 
    Group period end sales headcount was up 6%, with Contract up 7%, in line 
 with the Group's strategy, and Permanent up 2%. Contract represented 70% of 
     total sales headcount at the period end. Sequentially vs Q3, period end 
 Group sales headcount was up 1%. Average Group sales headcount for the year 
        was up 7% with Continental Europe up 8% and USA up 11%. 
 
        Balance sheet 
 
 SThree remains in a strong financial position, with net cash at 30 November 
   2019 of circa GBP11m (30 November 2018: Net debt GBP4m). The Group has a GBP50m 
revolving credit facility ("RCF") with HSBC and Citibank, 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: 23994224# 
 
A replay facility will be available for 90 days on 0800 358 2049 Passcode: 
301306355# 
 
The Group will issue its results for the financial year ended 30 November 
2019 on 27 January 2020 
 
        (1) All year-on-year financial growth rates in this announcement are 
        expressed at constant currency 
 
      (2) International represents our businesses outside the UK and Ireland 
 
(3) Market expectations for adjusted profit before tax for the year ended 30 
     November 2019 are in the range of GBP56.0m to GBP60.9m, with a consensus of 
         GBP58.5m 
 
        (4) Staffing Industry Analysts market forecasts for 2019 
 
        (5) Other includes Procurement & Supply Chain and Sales & Marketing 
 
        (6) DACH - Germany, Austria and Switzerland 
 
    - Ends - 
 
                           Enquiries: 
 
                           SThree plc 020 7268 6000 
Mark Dorman, Chief Executive Officer 
Alex Smith, Chief Financial Officer 
Steve Hornbuckle, Company Secretary 
 
                              Alma PR 020 3405 0205 
 
Rebecca Sanders-Hewett                [e-mail] 
 
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 47 offices in 16 countries, of 
   which 40 are in our international(2) markets, with circa 3,200 employees. 
 
 SThree plc is quoted on the Official List of the UK Listing Authority under 
     the ticker symbol STEM 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.:  34924 
EQS News ID:   934103 
 
End of Announcement EQS News Service 
 
 

(END) Dow Jones Newswires

December 12, 2019 02:00 ET (07:00 GMT)